The design of a computerized portfolio management information system.
James Muir · eScholarship@McGill (McGill) · 1969
The survey of portfolio management theory and practice showed that there is an obvious need to develop an automated system whereby meaningful data could be presented to the manager and used as the basis for portfolio updating decisions . The system proposed in this paper has divided portfolio management into five component parts: absolute performance measurement, relative performance measurement, absolute evaluation, relative evaluation, and other aids to portfolio management. The analyses provided in each part allow the manager to examine and evaluate portfolios for those criteria which will aid him in more efficiently carrying out his function. Absolute performance measurement is a means of measuring the decisions of the portfolio manager, the totality of buy, sell and hold decisions he makes during a time period. The simple compound rate of return measures the actuarial rate or internal rate earned during a time period. The average unit rate of return eliminates the effect of differing cash flows, ana therefore directly measures the performance of the portfolio manager. Relative performance measurement answers the question of how well the portfolio really aas done by comparing the returns of portfolios to certain rate of return indices and model portfolio returns. Through absolute and relative portfolio evaluation, current portfolio holdings can be studied to see if these holdings meet the investment objectives, and to make some sort of prognosis. [...]