2025 CFA© Program Curriculum Level 3 Core Volume 3 - PERFORMANCE MEASUREMENT

How to Use the CFA Program Curriculum
	CFA Institute Learning Ecosystem (LES)
		Designing Your Personal Study Program
		Errata
		Other Feedback
Performance Measurement
	Learning Module 1	Portfolio Performance Evaluation
		Introduction
		Performance Evaluation and Attribution
			Performance Attribution
		Return Attribution
			A Simple Return Attribution Example
			Equity Return Attribution—The Brinson–Hood–Beebower Model
			Brinson–Fachler Model
		Factor-Based and Fixed-Income Return Attribution
			Fixed-Income Return Attribution
		Risk Attribution
		Return Attribution Analysis at Multiple Levels
			Macro Attribution—An Example
			Micro Attribution—An Example
		Asset- and Liability-Based Benchmarks
			Asset-Based Benchmarks
		Benchmark Selection
			Evaluating Benchmark Quality: Analysis Based on a Decomposition of Portfolio Holdings and Returns
			Importance of Choosing the Correct Benchmark
		Benchmarking Alternative Investments
			Benchmarking Hedge Fund Investments
			Benchmarking Real Estate Investments
			Benchmarking Private Equity
			Benchmarking Commodity Investments
			Benchmarking Managed Derivatives
			Benchmarking Distressed Securities
		Performance Appraisal: Risk-Based Measures
			Distinguishing Investment Skill from Luck
			Appraisal Measures
		Performance Appraisal: Capture Ratios and Drawdowns
			Capture Ratios
			Drawdown
		Evaluation of Investment Manager Skill
			Performance Attribution Analysis
			Appraisal Measures
			Sample Evaluation of Skill
		Summary
		References
		Practice Problems
		Solutions
	Learning Module 2	Investment Manager Selection
		Introduction
		A Framework for Investment Manager Search and Selection
			Defining the Manager Universe
		Type I and Type II Errors in Manager Selection
			Qualitative Considerations in Type I and Type II Errors
			Performance Implications of Type I and Type II Errors
		Quantitative Elements of Manager Search and Selection
			Style Analysis
		Capture Ratios and Drawdowns in Manager Evaluation
		The Manager’s Investment Philosophy
			Investment Philosophy
			Investment Personnel
			Behavioral Biases among Investment Teams
		The Manager’s Investment Decision-Making Process
			Signal Creation (Idea Generation)
			Signal Capture (Idea Implementation)
			Portfolio Construction
			Monitoring the Portfolio
		Operational Due Diligence
			Firm
			Investment Vehicle
			Separately Managed Accounts
			Evaluation of the Investment’s Terms
		Management Fees
			Assets under Management Fees
			Performance-Based Fees
		Summary
		References
		Practice Problems
		Solutions
	Learning Module 3	Overview of the Global Investment Performance Standards
		Objective and Scope of the GIPS Standards
			Objective and Scope of the GIPS Standards
		Fundamentals of Compliance
			Definition of the Firm
			Definition of Discretion
			Other Fundamentals of Compliance
		Time-Weighted Return
			Time-Weighted Return
		Miscellaneous Return Calculation Topics
			Annualizing Returns
			Treatment of Cash Equivalents
			Treatment of Expenses and Fees
			Valuation Requirements
		Composite Time-Weighted Return Calculations
			Composite Time-Weighted Return Calculations
		Composites: Qualifying Portfolios and Defining Investment Strategies
			Composites—Defining Investment Strategies
		Composites: Including and Excluding Portfolios
		Presentation and Reporting Requirements for Composites
			Minimum Years of Performance
			Required Elements of a GIPS Composite Report
			Portability
			Sample Reports
		Verification
			Scope of Verification
			Verification Process
		Summary
		Practice Problems
		Solutions
	Glossary