Investment performance measurement isn't quite as simple as just finding the mutual funds with the highest return for the past year.
Each investment option in the plan has a purpose such as capital appreciation or capital preservation. When these diversified investments are mixed together a
plan participant should be able to create a particular experience. That might be low volatility and conservative returns or a more aggressive mix with higher growth potential over a longer time horizon, for example. We will also look at geographical diversification of investments as well as diversification
of management styles and asset classes.
We will look at several properties of each fund offered in your plan - how the fund
did compared to peer funds, volatility, the consistency of performance over time,
value added by the managers of the fund and whether the fund has outperformed a
relevant index and peer funds in various market environments.
What we like to see is a fund that has outperformed it's benchmark index and other funds managed in a similar style when viewed across multiple time periods and market cycles.
| What we will look at... |
What we will need to perform this task... |
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Consistency of performance relative to peers and a benchmark index
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We will need a recent performance report from your current provider which includes all the funds available to you, the share class of the funds you offer and any disclosures you received with the performance report. |
| Diversification of investment options |
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| Ability to construct portfolios that achieve investment objectives suitable for the participant base |
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