How Is Your Portfolio Performing?

Determine why the manager is or is not beating the benchmark. What is more important is understanding how the manager is achieving your company’s goals. SAA utilizes InsurerCIO to help you stay focused on the three most important factors: Performance, performance and performance.

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Trailing Returns Summary


What Does this Show About Your Portfolio:

The table shows performance against the relevant benchmark for various fixed income portfolios and equity portfolios. Fixed income portfolios, in the example, are also shown combined. Then, the fixed income and equity portfolios’ performances are combined for a ‘Total Consolidated’ viewpoint. We also use red and green arrows to note over/under performance. Since over or under performance in a relatively small portfolio may not greatly impact the overall portfolio, we show the ending market value for each fixed and equity portfolio, as well as the percentage invested in each.

Manager v Benchmark Return - Cumulative


What Does this Show About Your Portfolio:

This graph compares portfolio performance to its benchmark over several different time periods. Please keep in mind that an unusual over or under performance in a given year can severely skew these results. Also, please remember that this does not answer the question of whether the correct benchmark is being used. Since, over the long run, 95%+ of investment grade bond portfolio returns are yield related, it will be important to have a carefully constructed custom benchmark that is more yield focused than a generic index like the Barclay’s US Aggregate (which has about 2/3 in lower yielding US Treasuries). This will set a higher hurdle for manager performance.

Manager v Benchmark Return - Calendar Year


What Does this Show About Your Portfolio:

Since cumulative performance can be skewed by an unusually good or bad year for the investment manager’s performance versus the benchmark, it is important to view results year by year.

Drawdown


What Does this Show About Your Portfolio:

How bad did the portfolio’s value get as compared to its benchmark? Drawdown starts to appear on this graph once value turns downward. It stays down until portfolio value recovers, but starts again once the value turns down. These ‘icicles’ show how deep the drawdown was and for how long (width of the ‘icicle’) as well as when they occurred. Although this graph is for the fixed income portfolio, this can also be applied to other portfolios, including equities, where value changes make drawdown even more important to view.

Histogram of Returns


What Does this Show About Your Portfolio:

How many quarters were ‘up’ and ‘down’ and by how much? This histogram provides an idea of how volatile past quarterly performance has been, as compared to the benchmark.

Cumulative Manager Performance


What Does this Show About Your Portfolio:

This is the traditional ‘value of one dollar’ invested in the portfolio (or benchmark) graph. Instead of one dollar it starts at a value of 100 and shows cumulative over/under performance at various points in time.

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