Essential Performance Metrics in Institutional Investment Reporting
Institutional investment management involves the fiduciary duty of managing vast pools of capital—pensions, endowments, and sovereign wealth funds—with discipline and accountability. In this world, merely posting a high return is insufficient; the primary focus is not simply on what was earned, but how it was achieved relative to the risk taken. Comprehensive investment management reporting relies on standardized metrics to isolate true managerial skill from sheer market luck. This rigorous approach ensures that portfolio managers are evaluated fairly and that capital stewards meet their fiduciary responsibility to their beneficiaries.
The Spectrum of Return Measurement
To properly evaluate a portfolio, analysts must first understand the hierarchy of return measurement, which moves from the most basic to the most sophisticated.
The starting point is Absolute Return—the simple total return generated by the portfolio over a defined period. While essential for tracking wealth creation, this metric ignores market conditions entirely. Next is …
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