We are pleased to send you the second issue of the Investment Performance Measurement Newsletter, a quarterly publication for CFA Institute and CIPM Association members working in the field of performance evaluation and presentation.

In his classic study The Great Crash: 1929, John Kenneth Galbraith observed that the “bezzle” — his wry term for the “inventory of undiscovered embezzlement” — expanded rapidly during the 1920s and contracted sharply when market values collapsed. “Just as the boom accelerated the rate of growth,” he wrote, “so the crash enormously advanced the rate of discovery.” Similarly, numerous cases of alleged fraud have come to light in the wake of market value declines this year. As performance professionals with specialized expertise in evaluating investment results, let us be mindful of our obligation to protect the interests of clients in the good times as well as the bad.

In addition to a philosophical piece on professional ethics, this issue contains original articles about managing a performance department, the mathematics of multiperiod excess returns, attribution analysis for long–short funds, and the disclosure of standard deviation proposed in the GIPS 2010 Exposure Draft.

If you would like to propose a topic or write an article for possible publication in the Investment Performance Measurement Newsletter, please contact Dan Larocco, CFA, the lead editor.

On a personal note, we were profoundly saddened to learn that Damien Laker, CIPM, died on 23 March 2009. Damien was an uncommonly gifted thinker and educator, and his untimely demise is a terrible loss to the global performance measurement community. May he rest in peace.

Philip Lawton, CFA, CIPM
Head, CIPM Program

Timothy P. Ryan, CIPM

From the client’s perspective, sometimes a portfolio’s active returns over multiple periods just don’t look right. Tim Ryan, CIPM, explores the math. More

Frances Barney, CFA

It takes more than technical expertise to manage a performance department. In this article — the first in an occasional series on managerial issues — Frances Barney, CFA, describes how her organization develops performance professionals’ skills in analyzing and communicating investment results. More

Philip Lawton, CFA, CIPM

How can the investment profession be protected from the consummate scoundrel? Philip Lawton, CFA, CIPM, describes perfectly unethical people and offers some suggestions for dealing with them. More

Paul Copplestone

Performance attribution for actively managed long–short funds poses unique challenges, especially when there are rapid shifts between net long and net short positions. Paul Copplestone presents his firm’s approach. More

Jonathan A. Boersma, CFA

Returns matter, but so does risk. Jonathan Boersma, CFA, explains the role of standard deviation in the GIPS standards. More