AGEFI Luxembourg - avril 2024

Avril 2024 39 AGEFI Luxembourg Emploi / Droit Authors: Pascal FRANÇOIS (HEC Montréal) and Georges HÜBNER (HEC Liège, Liège University) Why does this book exist? S omeonewhowishes to invest in finan- cial assets necessarilymakes a bet on the future. The outcome of the portfo- liomanagement process results fromamix- ture of efforts, skills, and luck. For every investorwho appoints professionalmanager to take care of their financial assets, the chal- lenge ismuch less to participate in the in- vestment decisions than to control their quality throughportfolio performance tools. Thewhole bookdesign is drivenby the au- thors’ empathy toward these numerous per- sonswho entrust finance specialists and, in turn, legitimately expect themto defend their interests in the best possibleway. Throughout its chapters, the book continuously at- tempts toaddress the followingquestion: “ Givenmy position in the value chain, from the final customer to the experienced professional, can I get the information that re- ally matters regarding my portfolio’s performance? ”. There are excellent referencebooks, but todate there are not many of them and none does fully encom- pass all fields that are relevant to answer the above question. Furthermore, the literatureover the subject has literally exploded recently. It has becomeneces- sary to provide a contemporaneous synthesis. This means that the book’s title underlies a key respon- sibility: to propose a “complete guide” involves a promise to the reader, and the book’s content must deliver accordingly. The subtitle: Appraise,Analyze,Act represents the sec- ondprincipledriving the conception and treatment of the book’s contents. Studying portfolio perform- ance is not a meditative activity. As this topic be- longs to the field of financial management, there must be a concrete applicationassociatedwithevery single facet coveredwithin this book. Driven by the obsession to always leave a useful takeaway to the reader, the book provides recaps, roadmaps, or dashboards whenever they are deemed appropri- ate. This has resulted in a material that, as claimed by the authors, consistently addresses the three di- mensions that underlie the subtitle. Who is this book for? The primary readership targetedby this book is the community of finance professionals who are con- cerned, through whichever vector, with perform- ance measurement issues. This includes, but is not necessarily limited to, individual and collective (fund) portfoliomanagers, riskmanagers, analysts, wealth managers, private bankers, supervisors in the assetmanagement sector, andall thepersons in- volved inassociatedactivities. There isnogeograph- ical limitation, as the themes addressedhere and the way they are presented are truly universal. There is no restriction either regarding the size of the organ- ization forwhich this book is relevant. Some aspects are more interesting to large institutions, whereas other explicitly target the individual investor and her professional advisor. Many people who wish to prepare themselves for a positionintheportfoliomanagementindustrywould alsopotentiallybenefitfromthecontentsofthisbook. Having served themselves as instructors for the preparation of some major finance certifications, the authors have consciously designed the book’s mate- rial inaccordancewith the types of requirements that shouldbe expected in this context. Even though this is not an educational type of book, the pedagogical character of the structure andpres- entationhas been careful taken care of. Some topics are particularly suitable to be adopted as amain or support reference for a finance course. The parts, chapters and sections are rigorously structured ac- cording to the authors’ experience of teaching at the graduate and MBA levels. Most chapters propose a numerical example that is rolled out throughout the sections. To enhance their usefulness, excel files with all data, formulas, and graphs are available to the book’s owner in the companion website. Fur- thermore, each chapter is accompanied by a com- plete powerpoint presentation (for a total of 1016 slides) that is also available to the reader. Thus, many instructors would potentially benefit from prescribing the book asmainor supplementary ref- erence (for portfolio management or wealth man- agement courses, for instance). Finally, would the non-professional reader be in- terested in “The Complete Guide to Portfolio Per- formance”? For someonewho is reasonably literate and interested in portfolio management, the an- swer is positive. This is a “complete guide”, and it is always interesting tohave this bookonone’s shelf in order to better understand the challenges of per- formance evaluation and, inparticular, tomeaning- fully challenge the claims made by finance professionals around this topic. How to read this book? Because of its ambition to encompass a large variety of relevant topics in portfolio performance, this is a pure referencebook. Itspurpose isneither todevelop a single set of consecutive ideas as in a monograph, nortoproposeastudyguideforplainteachingappli- cations. Nevertheless, there is a redwire, reflected in the subtitle. The three themes are organized with a logicalprogressionthatcorrespondstothethreetime- relatedperspectives that underlie the keywords:Ap- praise = backward;Analyze = current;Act = forward. All chapters are designed in such a way so as to ad- dress a specific topic on a stand-alone basis, with the supportingcross-referencestootherchaptersfortech- nical detailswhenever needed. In contemporaneous times, professional managers wouldwant to rely on a fewtrustworthydocuments that go beyond the almost unlimited resources of search engines or AI companions. The choices of themes and their presentation through the 18 chap- ters, 254 tables, 225figures, and691 equations always address the same question: “ what’s in it forme? ”. This bookaimsatprovidingrelevantanswersattwolevels. First, through the coverageof anextensive set of top- ics, it is more likely than not that a specific solution can be found on a specific problem. By staying within immediate reach of the reader, a simple ges- ture – opening it at the table of contents or the index section– is sufficient to jump to the right sectionand get, if not the completeanswer, at least thedirections for further investigations. Second, by the construction of the chapters, the user whowantstoexploreaparticularthemecandigdeep intoit.Twospecifictoolsareprovidedtoeasethisper- spective:completenumericalexamples,builtwithre- alistic (i.e., actual but transformed) data, and reproduciblethankstothetransparentexcelfilesavail- able in the companionwebsite; anda systematic end- of-chapter “key takeaways and equations” section that provides a useful technical summary. Pedagogical applications are not forgotten either. Backedbycomprehensiveslidedecks,manychapters could lend themselves quite easily to the preparation ofteaching,training,orstudymaterial.Whenwriting thebook,theclarityoftheexposureandtheanchoring of the contents in the scientific and professional liter- ature have been a constant center of attention to the authors, who are both finance professors with a cu- mulative experience ofmore than 50 years. The structure at a glance The first half of the book rolls out themeasures that can be used to appraise performance. In the third quarter, it is shownhowtouse these tools toanalyze the performance achieved by the manager. In the final part, variousways of usingperformance for ac- tion are examined. Part I, featuring four chapters, is entirelydedicated to the in-depth study of the performancemeasures that were developed in the Capital Asset Pricing Model (CAPM)framework,suchastheSharperatio,Jensen’s alpha and the Information ratio. Part II investigates, infive chapters, the otherways to measure performance that coexist in the literature or in market practice. They can be split in three cate- gories: variations from the classical measures, meas- ures that focus on multifactor models or market timing skills, and the ones that address the investor’s rational or behavioral preferences. Part III, devoted to the analysis of performance and made up with four chapters, proposes some guid- ance on three dimensions. The first one is the choice of a relevant measure among the 116 ones dis- cussed in the first twoparts. The seconddimension focuses on the necessary adaptations to faithfully reflect how performance should be analyzed in specific portfolio management contexts. The last two chapters are dedicated to a set of processes that are at the core of performance analysis, namely con- tribution and attribution. Finally,PartIVisdedicatedtotheuseofperformance for action through four chapters. This starts with the issue of the communication of performance-related information. Then, the book examines howperform- ancemeasures themselves can be used as a decision- making tool for several strategies or investor types. This is where the link between financial and non-fi- nancial (i.e., sustainability-driven) performance is an- alyzed. The connection between past and future performance,generallyassociatedwiththeterm“per- sistence”,isthenthoroughlyexamined.Thebookcon- cludeswiththedelicatetopicsofagencyconflictsand illusions regarding performance. The last chapter could be viewed as a synthetic vade mecum for the decision-makerwhowishes to avoidbeingmistaken throughout the process. Prestigious recommendations The bookbenefits fromthe exceptional endorsement of William F. Sharpe, Nobel Prize in Economic Sci- ences 1990, who authored the CAPM and gave his name to themost famous performancemeasure. It is also recommendedby Frank J. Fabozzi, Editor of The JournalofPortfolioManagement andbest-sellingauthor ofmanyfamousfinancebooks.Fromtheprofessional community,itispraisedbyNaïmAbou-Jaoudé,Chief Executive Officer, NewYork Life Investments Man- agement, and Jean-Paul Servais, Chairman of the FSMAand IOSCO. Practical information The book is available for pre-order (e-book:April 26; hardcover: May 2) onWiley’s website: https://miniurl.be/r-5cqs at a price of $89.95. It canalsobepurchasedonallregionalAmazonwebsites,sometimeswith a discount. Supplementarymaterial(17pptpresentationsinstandardandwides- creen formats; 15 excel files with all data, formulas, tables and graphs associated with chapter examples) can be downloaded by any book’s purchaser by visiting www.wiley.com \go\francoishubner\cgpp (accessible at the book’s release date) Reference: François, P., and G. Hübner (2024), The Complete Guide to Portfolio Performance. Appraise, Analyze, Act. Wiley, 1088 pages. ISBN: 978- 1-119-93017-4. The authors: Pascal François is Professor of Finance at HECMontréal. He is the founding director of the Canadian Derivatives Institute and a former co-editor of Finance, the academic journal of the French Finance Association. He holds a PhD fromSorbonne University and ESSEC. Georges Hübner is Professor of Finance at HEC Liège (Liège University, Belgium). Georges serves as a non-executive director at BelfiusBankandBelfiusAssetManagement,aswellasanexpertmem- ber of the investment committee of the CERN pension fund (Geneva). He is also the founder of two fintech companies, Gambit Financial Solutions and Sopiad. He holds a PhD from INSEAD. The Complete Guide to Portfolio Performance : Appraise, Analyze, Act AP OC ETH ARL FACS PLETE M EG· SIOÇN TO DEIGU B S HÜ EGRO RNE PORTFOLIO PERFORMANCE APPR Y ANAL AISE, TAC ZE, B anque Internatio- nale à Luxembourg (BIL) annonce le lan- cement de sa solution de factoring basée sur la pla- teforme de la Fintech Ede- bex. Grâce à ce partenariat, la BIL propose une solu- tion de trésorerie inno- vante aux entreprises et aux indépendants. Avec la solution de factoring proposée par la BIL, en parte- nariat avec la Fintech Edebex, les entreprises vont pouvoir dynamiser leur trésorerie. Quel que soit le secteur d’activité ou la taille, toutes les entreprises B2B y ont accès. Ce qui compte, c’est la qualité des factures mises en vente sur la plate- forme Edebex. Les entreprises vendent leurs factures avant leur date d’échéance, ce qui leur permet de disposer des fonds plus rapidement, sans avoir à en assurer le recouvrement. Cette solution s’ajoute aux ser- vices de trésorerie bancaires classiques que la BIL propose comme les crédits de caisse. Jeffrey Dentzer, Deputy CEO of BIL a commenté : "A la BIL, nous comprenons l'importance cruciale des entreprises dans notre économie. C'est pourquoi nous nous engageons à déve- lopper des solutions finan- cières innovantes, telles que notre nouvelle offre de facto- ring, en partenariat avec Edebex. Cette solution offre aux entreprises et indépen- dants un accès rapide et effi- cace à une nouvelle source de trésorerie, démontrant ainsi notre engagement continu à soutenir les entreprises, petites et grandes, dans leur crois- sance et leur succès." WimDe Ridder, CEO d’Edebex a ajouté : "Nous sommes ravis de ce partenariat avec la BIL, permettant d'accompagner ses clients dans leur quête de solu- tions financières pour assurer leur croissance. Nous sommes honorés que notre offre sur mesure, flexible et accessible, apporte une valeur ajoutée sup- plémentaire au portefeuille de services déjà proposés par la BIL. Forts de plus de 10 ans d'exper- tise, nous adaptons notre savoir- faire à tous les domaines d'acti- vité, répondant ainsi à chaque besoin avec agilité et efficacité." Pour accéder au service de Factoring de la BIL reposant sur la plateforme Edebex, les entreprises choisissent les fac- tures qu’elles souhaitent ven- dre. Pour qu’une facture soit éligible, les services ou les pro- duits correspondants doivent avoir été livrés au client et il doit y avoir au moins 30 jours entre la mise en ligne de la fac- ture et son échéance. Dernier critère à respecter : les clients créanciers doivent être établis dans une sélection de pays européens. Avec ce service de factoring, la BIL démontre une nouvelle fois sa volonté d’apporter des solutions inno- vantes répondant aux besoins des entreprises et indépendants. Retrouvez tous les détails sur les conditions d’utili- sationdeceservicesur www.bil.com/factoring La BILs’associe à EDEBEX pour proposer sa nouvelle solution de factoring aux entreprises et indépendants De gauche à droite : Gilles Coeymans, Project Manager, BIL, Jeffrey Dentzer, Deputy CEO, BIL, Wim de Ridder, CEO, Edebex, Tony Oger, Key Partnership Developer, Edebex, Esther vanDijck, Chief Commercial andMarketing Officer, Edebex