Investment performance reports are critical documents that allow investors to track and evaluate the returns of their portfolio over time. These reports typically contain key metrics like annualized returns over different periods, risk-adjusted returns, performance attribution analysis, as well as comparisons to appropriate benchmarks. When generating a sample investment performance report, there are several key elements to include:
Present clear fund objectives and investment strategy
The performance report should start by laying out the specific objectives and investment strategy for the portfolio or fund. This context helps set expectations and allows for proper benchmarking later on.
Show periodic and cumulative investment returns
A well-structured performance report will detail periodic returns over multiple horizons (1-year, 3-year, 5-year etc.) as well as cumulative or since-inception returns. Geometric averages should be used rather than arithmetic.
Include common risk metrics
Relevant risk metrics like volatility, beta, Sharpe ratio etc. need to be presented alongside returns to account for risk-adjusted performance. Appropriate risk benchmarks should also be shown.
Provide attribution analysis
Performance attribution explains what investment decisions drove portfolio returns. An analysis should break down performance into effects such as asset allocation, security selection, currency impact, interest accruals etc.
Benchmark against suitable indexes
The investment performance must be viewed in the context of the broader market and economy. So inclusion of one or more suitable market indexes is key for comparison.
A sample investment performance report aims to showcase all key information an investor needs to make decisions. It sets objectives, shows periodic and cumulative returns over relevant horizons alongside risk metrics, analyses what drove performance via attribution analysis and benchmarks returns versus suitable indexes.