Education

Investment Performance

Investment performance refers to the return on an investment over a specific period of time. It is typically measured by the change in the value of the investment, expressed as a percentage of the original investment. 

• Investment performance is influenced by a variety of factors, including the type of investment, the investor's risk tolerance, and market conditions. 

• It is often used to evaluate the effectiveness of an investment strategy and to compare the performance of different investments.

Performance Attribution

Performance attribution is a technique used to analyze and understand the sources of returns in a portfolio. It aims to identify the specific factors that have contributed to the overall performance of the portfolio. The primary goal of performance attribution is to identify which investments or investment strategies have been most successful, and which have been least successful, so that investors can make informed decisions about how to manage their portfolio going forward.

Performance attribution is typically done by breaking down the portfolio's returns into several different categories, such as market return, sector return, stock selection, and currency effects. The returns in each category are then analyzed to determine which factors have had the most impact on the portfolio's overall performance. This information can be used to make decisions about which investments to buy, hold or sell, and to make adjustments to the portfolio's overall strategy.

Performance Reporting

Performance reporting is the process of regularly providing investors with information about the performance of their investments. It is typically done on a regular basis, such as monthly or quarterly, and includes details about the returns generated by the investments, as well as other relevant information such as portfolio composition, risk measures, and fee structures.

Performance reporting is an important tool for investors, as it allows them to track the performance of their investments over time and to evaluate the effectiveness of their investment strategy. It also allows investors to compare the performance of their investments to benchmark indexes, such as the S&P 500, and to other similar investments.

The main purpose of performance reporting is to provide investors with transparent, accurate, and timely information about their investments, so they can make informed decisions about their portfolio. Performance reporting also helps investors to comply with regulatory requirements and to communicate with other stakeholders such as clients or partners.