The assessment of how well an investment or portfolio performs, typically using metrics like ROI (Return on Investment), IRR (Internal Rate of Return), or performance attribution.
The discipline that dissects return into skill, beta, timing, and cost. Time-weighted arithmetic isolates manager decisions from external cash movements, while money-weighted internal-rate-of-return zooms in on the investor’s lived experience. Risk-adjusted yardsticks—information ratio, Sharpe, Sortino, Calmar—stack excess reward against volatility, downside, or drawdown, exposing strategies that sail fast only in tailwinds. Multi-period attribution frameworks untangle selection and allocation effects, marrying Brinson-Fachler algebra with factor regressions that trace hidden tilts toward value, momentum, or carry.
In the private-markets arena, public-market-equivalent metrics and K-score liquidity analysis step in where daily marks are fiction. A robust measurement stack becomes the cockpit dashboard, steering compensation, mandate renewal, and capital budgeting with statistical rather than anecdotal evidence.
