Read Why do business professionals choose ready-to-use KPIs? to find out the answers to these questions:
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).
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"Before writing a single line, I formulated some guiding principles, one of them was: "If our clients ask, "How can I find a good KPI for..." - I want this book to provide a perfect answer."