Sample interview questions: How do you evaluate the performance of investment managers and funds?
Sample answer:
Evaluation of Investment Managers and Funds
Quantitative Metrics:
- Return on Investment (ROI): Compares the total return generated by an investment against its initial cost.
- Risk-Adjusted Return: Measures the trade-off between return and risk, using metrics such as Sharpe ratio, Sortino ratio, or Jensen’s alpha.
- Alpha: The excess return generated by an investment manager over the benchmark.
- Beta: A measure of an investment’s volatility relative to the market or benchmark.
- Standard Deviation: A measure of the volatility of an investment’s returns.
Qualitative Metrics:
- Investment Style and Philosophy: Assesses the manager’s approach to investing, including their risk tolerance, time horizon, and investment criteria.
- Portfolio Construction: Evaluates the manager’s ability to construct diversified and well-balanced portfolios.
- Investment Process: Assesses the manager’s research, due diligence, and decision-making process.
- Track Record: Examines the manager’s historical performance over various market cond… Read full answer
Source: https://hireabo.com/job/1_2_35/Investment%20Strategist