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The Financial Times Guide to Investing, 3rd Edition by Glen Arnold

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20

Measuring performance: indices and risk

When judging the performance of your share portfolio, in addition to examining the absolute returns, you might like to observe how well you did against the market as a whole, or a particular sector of the market (e.g. technology shares). Furthermore, you may be interested in judging performance in relation to the risk of your portfolio. You may have outperformed the market, but did you take on a very high risk to do it? And, is that level of risk acceptable, given the extra return?

This chapter describes the main indices used to compare performance over time. It also explains the most commonly used measures for calculating share and portfolio risk.

Indices

Information on individual companies in ...

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