Instructor: David D. Spaulding, DPS, CIPM

ROR: Continued

• • • We will review of examples where returns “don’t make sense,” and explain why this is the case, as well as why, in reality, they do (or don’t).
  • • We will spend time going into greater depth on the IRR.
  • • We discuss how to calculate gross- and net-of-fee returns, whether the fees are extracted from the account or paid separately.
  • • We will discuss the two main approaches to derive returns at the subportfolio level.
  • • We will discuss income accruals, for both interest and dividends. We will address why we accrue as well as how accruals are handled. We will provide examples of both.
  • • We will go over the different approaches to handle cash flows, and the impact they may have on the accuracy and appropriateness of the resulting returns.

BENCHMARKS: Gain the insights into the primary performance measurement benchmarks (indexes, peer groups, absolute, and custom) and the importance of each.

• • • We will review the general criteria used to assess benchmarks.
  • • We will discuss the various approaches to create market indexes, including the different approaches to weighting the underlying securities, as well as how to blend them.
  • • We will discuss the effects of turnover on indexes, the impact of security or sector concentration, and other concepts.
  • • We will discuss the benefits and shortcomings of peer groups, to include survivorship bias.
  • • We will spend time discussing absolute benchmarks, why and when they’re appropriate, as well as they’re advantages and disadvantages.
  • • We will discuss custom benchmarks and review an approach to create them.