I ran across an interesting paper on performance measurement the other day. The article touched on many methodology and design themes I've been writing about in this blog over the last couple of years.

Assessing organizational performance is a critical function of BI. This article, though, has to do with PM more narrowly defined in the investment science world: how to measure and attribute performance of stock/bond investment portfolios. What portion of a given portfolio return is simply due to the direction of the market that's available to anyone who's participating (beta), and what part is due to the special skills of portfolio managers to tweak additional returns for their investors (alpha)? Demonstrating a positive alpha is important for financial services firms that must justify the fees they charge for services.

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