Performance Calculations

As far as the results of performance measurement area concerned, the money management industry has implemented stringent standards that need to be taken into account.

Standard deviation:	Also known as volatility. How much do individual returns vary from the average of a certain amount of time.
R2:	Details if the stock or portfolio and the market benchmark are positively or negatively correlated or uncorrelated.
Alpha:	Estimates return (adjusted for the risk taken) relative to the market-- S&P 500 (Positive alphas mean returns are higher than a market index)
Beta:	Assesses the volatility of returns (and correlation) versus the S&P 500
Sharpe ratio:	Calculates return (adjusted for the risk taken) against a benchmark
Geometric returns:	Should be estimated across multiple years.

Performance Reports

At Least Every Month:
We evaluate appraisal reports for:

		Existing holdings consistent with investment strategy
		Asset mix following guidelines
		Costs/transactions
		Performance comparisons versus industry indices

At Least Every Quarter:

		Check portfolio’s compliance with investing guidelines; consider influence of rebalancing if necessary
		See if any withdrawals will be due next quarter; assure that cash flow is enough
		Determine if contributions will be made next quarter; choose investments
		Assess market value of securities; if values are from money manager, have periodic audits
		Clear up discrepancies in listing of holdings/transactions
		Calculate portfolio’s return rate by asset class, strategy style, composite
		Match managers’ results against a standard benchmark and style/peer group

At Least Annually:

		Look over short-term investing process
		Establish performance results for short-term investing/cash management
		Scrutinize manager’s proxy voting policy/results/issues
		Examine manager’s brokerage/trading, including soft dollar use, employment of brokerage firms/clearing arrangements, trading quality, portfolio turnover, commission costs
		Delve into manager’s organization structure for any important changes to corporate/capital structure, investing style/process, brokerage affiliation/practices, Professional staff

Rebalancing Procedures

		Periodic readjustments of your portfolio are imperative if your investments are to stay on track
		Rebalancing your mix of assets ensures that your holdings stay within the boundaries that you initially delineated