Performance reporting is the calculation and presentation of investment returns for a client account over a period, including how returns are computed, what fees are deducted, and what they are compared against.
Time-weighted return measures the performance of the strategy, removing the effect of client deposits and withdrawals. Money-weighted return measures the client's actual experience, including the effect of when they added or removed money.
Both are correct answers to different questions. Reporting one while the client is asking the other is a frequent source of confusion.
Net of fees is what the client received. Any presentation of performance in advertising must show net figures, and the Marketing Rule is specific about how.
Because they are computing different things or from different data. Different return methodologies, different treatment of cash flows, different handling of accrued income, or different valuation dates will all produce different numbers from the same account.
An adviser running two reporting systems will eventually be asked which one is right, in front of a client. That is a good reason to have one.
A comparison is only informative if the benchmark resembles the portfolio in composition and risk. A mismatched benchmark is worse than none, because it looks like information.
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