The given BSC on Passive Portfolio Management strategy evaluation provides the opportunity to measure the real performance of management investing under a passive investment management approach. Since the allocation strategy is the main factor determining the rate of return for the entire portfolio, this model allows analyzing allocation preferences and gives an opportunity to evaluate the return of the asset classes within the portfolio. Such decomposition of the returns and clear vision of the allocation strategy ensures the objectivity and analytical viability of this BSC that gives more opportunities to measure the performance of the entire portfolio under passive management approach.
Read Why do business professionals choose ready-to-use KPIs? to find out the answers to these questions:
Ideally, you need to have a strategy (in a form of a strategy map) before you start thinking about the ways to measure its execution (KPIs). Don't have a strategy map yet? Use free Strategy Map Wizard to create a strategy map for your current business challenges. The wizard will:
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Passive investment strategy is defined by limited number of selling and buying actions. People carrying out passive investments look for long-term appreciation of investments and restricted maintenance.
This is also called 'couch potato strategy' or buy-and-hold strategy'. Making beneficial decisions to earn from passive investment asks for sufficient amount of research, patience and a portfolio that is pretty well diversified. A typical passive investor proceeds by buying a security and preventing getting affected from short-term price fluctuations. This is because they head into the investment field with the intention of remaining their for ample time period. All these attributes make it an attractive investment option for those who can wait for long enough to have the securities give them the required amount.
Due to these specific traits associated with passive investments, a 'performance measurement and management tool' becomes a necessity.
This can be in the form of a Balanced Scorecard that has various metrics listed on it to accurately convey the conditions of progress and growth. By relying on this instrument, one can precisely take forward the aims of making profits and ensure that maximum returns are extracted.
This is the actual scorecard with Passive Investments Performance Indicators and performance indicators. The performance indicators include: passive investments, equity (index funds), fixed income, asset classes return within the portfolio, historic return on money market, standard deviation of the portfolio, portfolio beta, holding period return (hpr), return on the invested capital (roic).
Download a trial version of Passive Investments Estimation Balanced Scoreboard or purchase a full version online.
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