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Investments: Analysis and Management, 12th Edition by Charles P. Jones

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chapter 22

Evaluation of Investment Performance

At long last you have arrived at the end of your quest to learn enough about investing to manage your inheritance sensibly. Now that you know some basics about how to invest, what your alternatives are, and what to expect, you must consider how well you are doing as an investor over time. Measuring portfolio performance is the bottom line of investing. Everyone wants to know how they are performing as investors, either in managing their own portfolios or entrusting their money to others to manage for them. Furthermore, if they use others to manage their money, or read investing newsletters, they should be aware of what to look for when investment results are presented to them.

Chapter 22 explains what is involved in the evaluation of investment performance. While it might seem like a straightforward process to determine how well an investor's portfolio has performed, such is not always the case. Chapter 22 covers well-known measures of portfolio performance such as the Sharpe measure and also discusses style investing, performance benchmarks, and performance presentation standards.

AFTER READING THIS CHAPTER YOU WILL BE ABLE TO:

  • Understand the issues involved in evaluating portfolio performance.
  • Evaluate popular press claims about the performance of various portfolios, such as mutual funds, available to investors.
  • Understand concepts such as performance attribution and style analysis.

We have now discussed, in an organized and ...

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