Last section (Multiple response)

Time-weighted Return

How well the fund manager performed minus withdrawals and contributions

Eliminates the distortions caused by timing of contributions and withdrawals

Think of it like:

• Time = managers talent

• Money = my return

Money-weighted Return

The investors actually return

Includes the effects of contributions, withdrawals and when contribution went in

Sharpe Ratio

Return - Risk-Free Rate / SD

The return you get for the degree of risk taken

Information Ratio

Measures how much a fund manager beats the benchmark for each unit of tracking error they take

It’s asking was the extra return worth the extra risk

Fund return - Benchmark Return / Tracking Error

For clients with large equity portfolios what reporting is needed

• Portfolio shown against benchmark

• Client must receive statements every 6 months

• If adviser is to carry out regular suitability assessments, this must be agreed in writing

What can be directly attributed to portfolio manager returns

Asset allocation

Stock selection