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Identifying A Sponsor’s Impact on Total Returns Performance Attribution for the Total Portfolio

Introduction

Performance attribution is a well-recognized quantitative approach to identifying the outcome of investment decisions. Sponsors of pensions, endowments, and foundations view performance attribution as an important tool in their investment manager due diligence process.

However, an investment manager’s decisions are nly part of a plan’s success; the sponsor’s own decisions also weigh heavily, but very few sponsors are able apply performance attribution to their own decisions. Also known as macro or balanced attribution, total portfolio attribution enables sponsors to:

Identify the performance attributable to the strategic asset allocation policy

Examine the outcome of deliberate deviations from policy weights

Measure manager-picking skill in aggregate, or by asset class or investment style

This paper will discuss the methodology for conducting total portfolio attribution and outline seven critical challenges sponsors must consider when evaluating their options.

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Measuring High Performance Sponsorship Programs

Sponsorship has evolved a great deal since the time not that long ago when the phrase “sponsorship can’t be measured” was an accepted “fact.” As all aspects of the industry have become more sophisticated, and the dollar value and prominence of sponsorship have grown, accountability has become a vital skill for today’s sponsorship marketers.

However, much of what passes for sponsorship measurement misses the mark. The general mentality has been to transfer advertising metrics and processes to sponsorship without considering the differences between sponsorship and advertising or the inherent flaws in the way advertising itself is measured.

The fundamental issue for today’s sponsorship professional is the lack of a standard measure. That is a fact. But that marks the beginning, rather than the end, to the measurement discussion. Just as your business and brands are unique, so are your sponsorship's. The bottom line is: to measure the effectiveness of your investments in fees as well as activation sponsors must develop a customized approach.

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