4.†Pictures are better than numbers.
The old adage, "A picture is worth a thousand words" is certainly true when it comes to presenting performance. Most people are more visual than numeric, so if you want to illustrate a point, the best way to do so is with a clean, simple, elegant chart in which the story is immediately obvious. This is better than having the audience sort through rows and columns of numbers to pull out the relevant information.
5.†Have it your way.
For better or worse, the financial industry has settled in to a standard way of looking at performance. There is a standard set of benchmarks used for comparisons: the S&P 500, the Russell 2000, the Barclays Capital Aggregate Bond, etc. There is a standard set of metrics everyone uses, like Sharpe ratio, beta or alpha. Everyone looks at the same time frame: the last one, three, five and ten years through the most recent date. But by limiting the variables, one loses much of the insight that can be gained by looking at the numbers.
For example, maybe the product you're running is a small/mid cap or "SMID" manager. In such a case, a more obscure index like the Wilshire 4500 or Russell 2500 would be more appropriate, so why not use them? Or perhaps the product you manage is a go-anywhere, invest-in-anything strategy. In such cases, a beta or an alpha versus a single benchmark is meaningless. So why not use absolute return metrics or capital preservation measures to tell your story?
Maybe the great story behind your product is how well it holds up when markets crash. If that's the case, showing performance during the credit crisis period from August 2007 to the bottom of the market in February 2009 would be a much better way of understanding bear market performance than looking at an annualized five-year return.
None of the above rules of thumb will change the actual performance numbers. The numbers are what they are, and if the performance is poor, nothing can change that. But what the above ideas do is allow you to explain why the numbers might have been bad and help your audience understand the context. If your numbers are fundamentally good, these ideas allow you to put your best foot forward and help your products stand out in a very crowded marketplace.
Marc Odo is Director of Applied Research at Zephyr Associates.