CAIA L2 - 1.4 - Assessing Long-Term Investor Performance: Principles, Policies and Metrics

Question 1

List

3 main advantages
that LTIs have over
for-profit asset managers
and third-party service providers

1.4 - Assessing Long-Term Investor Performance

Answer 1

• Idiosyncratic advantages
  (not just ones that are used in common practice)
• Time horizon: Long-term time horizon
• Organizational ambidexterity: LTIs must be innovative and flexible (due to economic and market changes)

1.4 - Assessing Long-Term Investor Performance

Question 2

List

5 golden rules for
developing effective
investment management metrics

1.4 - Assessing Long-Term Investor Performance

Answer 2

TACET
* Task-relevant - metrics aligned (with goals and objectives)
* Adaptive - metrics revised (market risk, market uncertainty, experience)
* Consistent - metrics of organization is consistent with individuals
* (Mutually) Exclusive - metrics available for key resources / motivate employees
* Transparent - metrics are simple

1.4 - Assessing Long-Term Investor Performance

Question 3

List

3 Environmental enablers metrics
and its measures

1.4 - Assessing Long-Term Investor Performance

Answer 3

• Culture
  (1 Investment Beliefs, 2 Success Focused, 3 NPS)
• Governance / Board Engagement
  (1 Delegations Utilized, 2 Opportunities Reviewed
• Technology
  (1 % Budget, 2 Technology Satisfaction)

1.4 - Assessing Long-Term Investor Performance

Question 4

List

4 Production inputs metrics
and its measures

1.4 - Assessing Long-Term Investor Performance

Answer 4

• People
  (1 Work Product, 2 Personnel Matters)
• Proccess (risk management systems, systems of accountability, and delegation frameworks)
  (1 Risk Governance)
• Capital
  (1 Capitalizing on Capital)
• Information
  (1 Data Ready)

1.4 - Assessing Long-Term Investor Performance

Question 5

List

3 Intermediate outputs metrics
and its measures

1.4 - Assessing Long-Term Investor Performance

Answer 5

• Alignment
  (1 Goal Focused, 2 Goal Consistency)
• Commitment
  (1 Time Horizons)
• Knowledge management
  (1 Knowledge Sharing, 2 Knowledge Quality)

1.4 - Assessing Long-Term Investor Performance

Question 6

List

1 Investment Result Metric
and its measure

1.4 - Assessing Long-Term Investor Performance

Answer 6

• Investment Performance
  (1 Portfolio Health, 2 Cost Efficiency)

1.4 - Assessing Long-Term Investor Performance