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Market-Adjusted Implementation Shortfall

Hi,

Having read the short bit of text on this I am still confused as to the logic (and use) of this calculation.  See Reading 29, page 26 for the CFAI's explanation/example.  I completely understand the formulas involved but for the life of me can't understand what this measure could be used for (in a practical/real world sense)?

I mean, if we are adjusting the implementation shortfall for the movement in the broader market (or more precisely, for the expected return of the asset traded given it's estimated Beta) then why the hell did we calculate the implementation shortfall in the first place??  Because basically that's what it's doing - it compares how much the stock was expected to return over the period (based on its Beta) against what it actually did, less the explicit/implicit costs derived from the standard implementation shortfall measurements.  The consequence is that by investing in under-performing stocks (under performing what is expected by est. Beta) your MAIS will be lower, and vice versa. 

This also seems to introduce a way to "game" implementation shortfall by reviewing the market-adjusted implementation shortfall at a time where the stock you have purchased has under performed what was anticipated by it's estimated Beta... 

Anyway.  The fact this exists suggests there is some kind of logic to it.  Would be interested to hear if anyone has an explanation of what/why this measure exists/has any use.

Cheers :)

ameliaswift
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