MEASURING AND EVALUATING PERFORMANCE

This step would involve the measuring and evaluating of portfolio performance relative to a realistic benchmark.

We would measure portfolio performance in both absolute and relative terms, against a predetermined, realistic and achievable benchmark. Further, we would evaluate the portfolio performance relative to the objective and other predetermined performance parameters.

The investor or manager would consider two main aspects; namely risk and return. He would measure and evaluate, whether the returns were worth the risk, or whether the risk was worth the return. The issue here is, whether the portfolio has achieved commensurate returns, given the risk exposure of the portfolio.

Measuring and evaluating portfolio performance, would be used to give the investor or manager feedback. And would help the investor or manager in improving the quality and performance of both the portfolio and its management process in the future.