FYI: Key Points
.Investment professionals can overdo performance measurement simply because technology makes it so easy and it seems a worthwhile task to constantly gauge if clients are on the path to meeting their long-term financial goals.
.Too often, however, “doing something” based on short-term performance measurement can degrade the long-term performance potential of a portfolio by chasing recent winners.
.If we must regularly assess performance, let’s focus on performance relative to expectation distributions, such as a strategy’s expected tracking error of returns relative to its benchmark.
Regards,
Ted
http://www.etf.com/sections/features-and-news/research-affiliates-performance-measurement-how-do-it-if-we-must?nopaging=1
