Performance measures are designed to produce numbers that represent returns. They are designed to give information for evaluating the effectiveness of management or strategy.
Simple performance measurements may be used in cases where portfolio activities are relatively static. But where the portfolio activity is voluminous, measuring performance is move involved and computationally intensive.
In this memorandum, we look at the holding period return (HPR) to explore the basic idea of how portfolio return is computed and apply it to portfolio activity which are relatively static. We will examine its limitation where there are numerous activities in the portfolio. Finally, we will show the calculation of the time weighted rate of return (TWRR), the industry standard for portfolio performance measurement.
CS Lucas are running a webinar on 28th May. Register your interest for the webinar here: