Performance reporting: setting high standards

INVESTORS are keen to know how hard their investments are working for them. Every additional percentage point return can add up considerably to retirement funds if we factor in compounding returns.

Those building up a steady stream of passive income would want to know if they are any closer to financial freedom. Investors also compare. They want to know if their investment managers are underperforming or if there are better opportunities out in the market. Hence, investors examine performance metrics rather closely.

The report cards on investment performance are provided by investment managers at the close of the financial year. This duty to present a report card must be done in an appropriate manner given the importance of returns to investors. What are then some guiding principles behind this important reporting exercise?