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The evolving position of the Investment Performance Measurement

Posted on by aldopuch

By: Bill Humphreys

The role and position of Performance Measurement in the Asset Management

In many asset management businesses Performance Measurement (and attribution) has been hidden in the middle or back office departments and isolated from the investment process itself. Some asset managers rationalize this by saying that the function needs to be totally independent and they treat it like a quasi compliance or internal audit function.

 

This approach now seems to be outdated and an increasing number of asset managers recognize that performance measurement is an integral part of the investment decision-making process. In fact, you could argue that it is the most important part of the process in that it measures the effectiveness of the investment decision-making process, and it is the basis of the reporting and communication between the owners of the capital and those entrusted to manage it on their behalf. For those who embrace it successfully it not only measures the effectiveness of past performance but also forms the basis for future decision-making and is an essential element in the risk management disciplines.

Impact of GIPS on Performance Measurement

There is no doubt that the importance of the Performance Measurement function has grown in recent years and this trend is likely to continue. With the emergence of Global Investment Performance Standards (GIP’s) more and more asset managers are recognising the need to strengthen this function.

If this an area of interest for you why not join our Performance Measurement and Attribution course in London which explores all aspects of performance measurement including the calculation of returns, impact of different benchmarks and adjusting performance for risk taken. Through the analysis of the best current industry practice you will also learn how to set up, maintain and improve performance measurement systems within your organisation.

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Eureka Financial offers over 100 public and in-house training courses in banking and finance, asset management, corporate finance and M&A, compliance, risk management,  investments, wealth management, soft skills and more. For more details visit: www.eurekafinancial.com

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