Appleton Greene – Performance Analysis
Support Fund Sponsor’s Initiatives
Appleton Greene – Fund sponsors and investment managers can have different perspectives when identifying the performance evaluation period. This determination can be extremely critical to justifying appropriate active management fees, risks assumed, and measured performance. One critical example is the impact that internal and external cash flows have on an account’s rate of return which can by quite considerable during the applicable evaluation period. Incorrectly determining the correct performance evaluation period can impact the accurate calculation of investment related changes and missed opportunities to identify unacceptable risk adjusted performance as well as critical feedback of the investment management process which can be critical to improving performance. Having a consultant that is experienced in calculating and evaluating account performance as an extension of your team can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Developing an effective Performance Evaluation Process
There are multiple steps to measuring active management performance and determining a sound and practical approach can be time consuming, daunting, and unsettling. As a fund sponsor assessment tool, performance attribution analysis is a check and balance to justifying appropriate active management fees and can lead to the identification of critical policy actions. An effective performance attribution process should be a fundamental part of the fund sponsors performance analysis process and having a consultant that is experienced in evaluating and improving processes as an extension of your team can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Care and Dedication
The role of a fiduciary is to act in a relative position of trust and in relation to risk taking endeavors, such as investments, is to analyze the appropriateness and risk given the client’s needs and circumstances. A critical, yet sometimes over looked, function of performance analysis is the monitoring of the fund sponsor’s circumstances, i.e. cash flow and changes in constraints, market and economic changes and the account (fund) to meet their ethical responsibilities. Having an experienced trust and fund services professional as an extension of your team to perform external risk analysis can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Working Together – Teamwork
Performance evaluation details evaluating a fund manager’s performance against an appropriate previously identified benchmark. Performance analysis is a comparative process that provides concrete information regarding fund manager’s performance. This process can be challenging and difficult. Fund sponsors make every effort to determine a suitable benchmark that will sufficiently permit a relative base to conduct an objective risk adjusted performance evaluation. Having a consultant as an extension of your team that can assist with identifying and justifying, for example, the investment manager’s benchmark can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Provide Added Value
Fund sponsors are tasked with many obligations and responsibilities that range in importance and allocation of time. Situations that can have a critical impact on account performance arise and effective decisions must be made. Decisions that appear to be “one time” choices can have a sustainable impact on current and future account performance. Having a consultant as an extension of your team that can effectively and efficiently conduct and or assist with account analysis as well as identification of affecting performance factors can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Effective Communication
Effective communication is highly important when communicating cultural, strategic and technical factors. It is important that the fund sponsor’s team feels they can ask engaging questions without receiving derogatory responses or responses that are initially provided to cause further misunderstanding and more importantly hesitation to ask future questions that could lead to undesirable outcomes. Having a consultant as an extension of your team that has the communication skills to engage and interact with your team at multiple levels can be highly beneficial and a quality check to justifying appropriate active management fees. Appleton Greene
Mutual Understanding
Mutual understanding is highly important to the establishment and success of a consultancy engagement. It is important that the potential for semantic confusion and misunderstanding is identified and addressed. In addition to the fund sponsor and consultant having a mutual understanding regarding service expectation it is also vital that the fund sponsor has a range of service options to select from in order meet their service needs. Appleton Greene
Training and Development
Having an organizational standard for analyzing investment performance minimizes the potential for ambiguous or misleading analysis. While inadequate processes and procedures as well as unshared institutional knowledge can thwart the best intentions and lead to inaccurate analysis. Continuous training and development as well as knowledge sharing opportunities for many fund sponsor organizations is paramount to the establishment of best practices. Appleton Greene
Analytical Thinking
Identifying performance drivers and separating information into manageable parts to understand both positive and negative performance results is critical toward recognizing and evaluating investment manager skill. The successful identification of investment manager skill is a direct result of analytical thinking. Analytical thinking is extremely vital when conducting performance analysis and acts as a counter weight toward ignoring or neglecting what may be important data. Appleton Greene
Organizational Commitment
For fund sponsors, business as usual is simply not an option. Eliminating processes and procedures that are constraining and impairing successfully incorporation of methods, tools and techniques that can result in strengthening and or developing an investment program that has the appropriate level of discipline and focus. Incessant organizational commitment to performance analysis is highly important to the identification of successful investment strategies and is paramount to identifying ailing strategies. Is your organization committed to identifying ailing strategies? Appleton Greene
Continuous Delivery
Perhaps the most important aspect that a key decision maker must determine when deciding to utilize a consultant is can that individual continuously deliver accurate, reliable, and effective results. Because ultimately the strength of the consulting service value proposition is the likelihood of a successfully engagement and a lasting positive relationship which resides on the ability of the consultant to effectively solve problems and propose sufficient solutions. Appleton Greene
Professional Behavior
A professional consultant, in addition to continuously delivering accurate, reliable, and effective results should possess the necessary professional attributes such as authenticity, ethics and objectivity to identify a few. The successful ability of the consultant to effectively collaborate with the fund sponsors team is paramount to creating an environment where asocial behavior can be identified and the systematization of sub-optimal decision making can be recognized. Appleton Greene
Mr Turner is an approved Senior Consultant at Appleton Greene and he has experience in finance, management and globalization. He has achieved a Master of Securities Analysis and Portfolio Management, a Master of Business Administration and a Bachelor of Business Administration. He has industry experience within the following sectors: Banking & Financial Services; Consultancy; Automotive; Chemicals and Manufacturing. He has had commercial experience within the following countries: United States of America, or more specifically within the following cities: Boston MA; Chicago IL and Detroit MI. His personal achievements include: multi-billion dollar portfolio administrator; lead portfolio analyst; risk analysis subject matter expert; process standardization subject matter expert and has developed modified analyzed financial models. His service skills incorporate: credit analysis; performance analysis; style analysis; financial analysis and risk compliance. Appleton Greene
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