Monitoring investment manager performance

4 Jan 2021

performance manager

As lockdown 3.0 draws to a close and the Covid-19 vaccine moves closer to becoming a reality, thoughts turn to how the global economy will recover from such a substantial setback. Now more than possibly ever before investment manager performance is being put under the microscope.

Investment managers – also known as fund managers and asset managers – strive to help their clients’ money grow, allowing them to enjoy a more comfortable future.

Historically the evaluation and selection of investment managers – and funds – has relied on a level of trust as each manager provides their own investment performance figures. However, recent events have shone a spotlight on the economy and inevitably on the performance of investment managers and the need for more transparency.

To fully understand investment management performance we need to look at all aspects of the portfolio including:


Investment is a data centric environment. The Covid-19 pandemic and subsequent market fall will mean many would have lost substantial value in their investments in the past year, but, the acceptable level of loss will depend on the overall objectives and timescales.

Performance versus risk and return

When it comes to investment performance, risk management is the process of identification, analysis, and acceptance – or mitigation – of uncertainty in investment decisions. Essentially, risk management occurs when a fund manager analyses and attempts to quantify the potential for losses in an investment, and then takes the appropriate action (or inaction) given the investment targets and risk tolerance.

The true test of performance comes from comparisons against its competitors. Has your manager achieved a better risk adjusted return than his competition, have they given you a better return, but taken less risk, or have they taken greater risk but achieved a higher return?

Risk is inseparable from return

Every investment involves a degree of risk. A thorough understanding of risk in its different forms can help investors to better understand the opportunities, trade-offs, and costs involved with different investment approaches, your firm can help provide this to its investors. The value of investments can fluctuate over time, so falls – as well as increases – are to be expected.

Consistency of team and approach

Performance consistency is not an indicator of fund manager Skill. Performance ‘reliability’ is encouraging but objectively, robust decisions can at times go unrewarded for prolonged periods.

Performance in context

Returns should not be examined in isolation but considered in the context of the risks taken. It is also important to consider whether they are being delivered in adherence with the mandate and the strategies agreed.

The Generation Wealth Management central investment proposition

In 2008 our Investment Director, Shai Patel – following substantial research and due diligence – concluded that the best outcome for clients was achieved by employing the services of Discretionary Fund Managers (DFM) who could provide clients with excellent portfolio and risk management.

The principle was built around four key pillars of our central investment proposition:

  • Bespoke Active Discretionary Fund Management
  • Active Asset Allocation
  • Active Risk Management
  • Selecting Only ‘Best of Breed’ in Discretionary Fund Management

By adhering to these principles, our intention is to pinpoint the top risk adjusted performing managers, ultimately helping to reduce investment risk and provide a superior investment experience for our clients.

Essentially, the Generation Wealth Management team act to ‘police’ the discretionary fund managers for the benefit of our clients.

We are confident we are one of only a handful of Independent Financial Advisers in the UK offering this method and level of governance. Contact one of our experts today.



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