Over the last few months, you may have heard reference to “CRM2,” a set of regulations meant to enhance transparency in the investment industry by mandating investment management firms, dealers and advisors to provide clear reporting to their clients related to fees and performance, among other topics.
We welcome the push for transparency across the industry, and Burgundy’s reporting already meets most of the CRM2 requirements. The new piece for you, as a Burgundy client, deals with an alternate method of calculating your portfolio’s performance. Burgundy has historically used a time-weighted rate of return to measure performance, which is a standard in the industry. This continues to be the most appropriate tool for assessing the performance of the investment manager itself, as well as for comparing performance across investment managers or relative to a benchmark. The regulation now requires that investment managers provide an additional return calculation for your portfolio’s performance, called the money-weighted rate of return.
To help explain the difference between these two calculations, and to give you an idea of what to expect going forward, follow these links to view a video or read a written article by the Burgundy team. They can also be accessed via the links in the sidebar, under “Related Posts.”
This post is presented for illustrative and discussion purposes only. It is not intended to provide investment advice and does not consider unique objectives, constraints or financial needs. Under no circumstances does this post suggest that you should time the market in any way or make investment decisions based on the content. Select securities may be used as examples to illustrate Burgundy’s investment philosophy. Burgundy funds or portfolios may or may not hold such securities for the whole demonstrated period. Investors are advised that their investments are not guaranteed, their values change frequently and past performance may not be repeated. This post is not intended as an offer to invest in any investment strategy presented by Burgundy. The information contained in this post is the opinion of Burgundy Asset Management and/or its employees as of the date of the post and is subject to change without notice. Please refer to the Legal section of this website for additional information.