February 1, 2017

Average returns ‘are not enough to judge outcomes’

Investors should pay more attention to money-weighted returns than time-weighted returns, according to the chair of the 300 Club, an industry think-tank.

Stefan Dunatov, CIO of Coal Pension Trustees, said the shift in focus more towards “wealth” rather than just percentage gains would improve investor understanding of how to achieve investment objectives and the risks involved.

In a new paper – “Using wealth, not returns, to set objectives and measure success” – Dunatov argued that it was the level of wealth, rather than returns, that will determine how well investors with present or future liabilities will achieve their goals.

Read the full paper on the IPE website