Practical Applications of Performance Measurement for Alternative Investments Portfolios

In Performance Measurement for Alternative Investments Portfolios, from the September 2023 issue of The Journal of Portfolio Management, Bruce Feibel of State Street exhorts asset managers to embrace alternative investment performance measures if their product offerings include illiquid alternative investment products such as real estate, hedge funds, or private equity funds. Feibel provides a primer that covers vital aspects of the alternative investment performance measurement process. Analysts need to carefully consider, and sometimes modify, the return calculations, ex post risk measurement, and performance presentation methods used in traditional investment performance analyses to address the different characteristics exhibited by alternative investments. The need to understand a wider range of analysis techniques is becoming more important as interest in alternative investments continues to grow. Therefore rigorous, transparent performance analysis with appropriate techniques is now required for both institutional and retail-level alternative investment products.