How do you define outperformance by stock funds?

Portfolio managers want to outperform their benchmarks. There’s no question in my mind about this. But how much of an advantage do you need before you can claim outperformance?

Outperformance for stocks

To keep things simple, let’s focus on portfolios investing in stocks.

Is it okay to claim outperformance if your return exceeds the benchmark’s by more than 1 basis point (0.01%), 25 bps, 50 bps, or 100 bps?

Or should the margin be calculated relative to the benchmark’s return? After all, exceeding the benchmark’s return by 26 basis points (0.26%) looks better when the benchmark returns 0.01% than when it returns 45%.

Please answer the poll in the right-hand column of this blog. I’ll report on the results in my February e-newsletter.

Diverse opinions on “outperform”

I’m literal-minded. To me, a fund “outperforms” when it beats its index by the tiniest margin, though I doubt that I’d crow about that. However, asset management companies often report such returns as “in line with” or “closely tracking” the benchmark. The concerns of their legal or compliance departments probably influence this decision.

Here’s one example:

…the Wasatch Heritage Fund posted a return of 6.22% for the quarter. These results closely tracked those of the Fund’s benchmark, the Russell 1000 Value Index, which returned 6.78% over the same period.

Meanwhile, some managers–including the manager of the Wasatch Global Science & Technology Fund–question whether their returns should be compared to benchmarks.

Typically, the first paragraph of our quarterly letter to shareholders includes a statement regarding the Fund’s performance relative to its benchmark. We intend to move away from this approach beginning with this letter, as
we think the industry norm of tracking performance versus a broad index on a quarter-by-quarter basis distracts from the Fund’s long-term investment strategy. Our new mantra, forged by the pressure of the 2008–2009 credit crunch, is that we must invest “away from the market” as we attempt to deliver exceptional long-term returns.

I’m looking forward to learning what YOU think.

Dec. 27. Oops. I made a miscalculation in discussing the Heritage example, so I’m deleting the offending sentence thanks to David Lufkin.

Reader challenge: What’s the writing lesson from Physicians Mutual?

You’re getting smarter about writing investment and financial communications, so I’m giving you a challenge: watch this video and then tell me what lesson it teaches writers.

I look forward to hearing from you!

Lessons from “Presentation Skills for Investment Professionals”

You can never learn too much about how to give an effective presentation, especially about weighty topics such as investment management. That’s why I logged into “Presentation Skills for Investment Professionals,” a recent presentation to the CFA Institute by Dave Underhill of Underhill Training & Development.

Some of Dave’s advice resonated with advice I give my writing students. For example, don’t get deep into details before you tell your audience the value of what you’re discussing.

Boil down the tsunami

Take a tsunami of data and boil it down to most important point,” said Dave. It’s a mixed metaphor, but I love his point. Look at the data and pretend you’re an audience member asking “So what? Why should I care about this?”

This is a topic I’ve addressed in “Focus on benefits, not features, in your marketing.” As I say in my writing workshops, your audience is looking for the WIIFM, which is short for “What’s In It For Me.”

Leave time for questions

Don’t make your presentations too long. Allow time for questions, suggested Dave.

Figure that one PowerPoint slide will 60-90 seconds to discuss. For goodness sakes, don’t READ your slides, as I did when I first started speaking in public.

Show, don’t just tell

Among the techniques that Dave uses to improve the power of his presentations are:

  1. Telling a story
  2. Using numbers, not just words — I suggest you use a graph, rather than a simple table, if your data lends itself to a more visually appealing display
  3. Using gestures to demonstrate your ideas

Go the extra mile

I was very touched that Dave took the time to email an answer to the question I’d sent in. It was a question without broad audience appeal, but he answered anyhow. That’s a classy thing to do.

To learn more of Dave’s tips, register to watch the replay of “Presentations Skills for Investment Professionals.”

Guest post: “Making Research Readable”

Investment research analysts can learn to write better. In his guest post, Joe Polidoro gives directors of research his advice on how to make this happen. I’m delighted to have met another advocate of good investment writing thanks to Twitter, where Joe tweets as @joepolidoro.

Making Research Readable
By Joe Polidoro

Is it worthwhile, or even possible, to improve the quality of your research analysts’ writing? Yes and yes, and I’ll tell you how. First, the business case.

It seems reasonable that good writing—clear, engaging, memorable—should be more effective than sub-par writing at reaching your audience. But let’s see the numbers.

One of the best proofs I’ve come across is courtesy of Dame Marjorie Scardino, CEO of Pearson PLC and former CEO of the Economist Group (hat tip: Vicki Cobb and I.N.K.)

Scardino located a study in which three groups—linguists, writing professors, and journalists –were asked to improve passages taken from a history textbook. Students were then asked to read the original passages and the rewrites and immediately record as much as they could remember.

Recall of the journalists’ rewrites beat recall of the other groups’ rewrites and of the original text by a whopping 40%. Good writing matters.

And I think average writers, including research analysts, can measurably improve their writing—with the right help.

First, look for a writer
In your quest for a writing coach, avoid anyone who doesn’t make a living—and a decent one—by writing. As Stephen King said, anyone who is paid to write knows how to write effectively. Professional writers “get the story told memorably … and quickly,” says Scardino. Those who make their living doing other things, including the teaching of writing, usually can’t.

Hire a writer/coach
A writing pro isn’t necessarily a good writing teacher, however. Aside from references, here’s how to tell. Effective teaching is less about charisma, more about preparation, perseverance, and a passion for the work. So ask questions: What are you going to teach my analysts? What are your goals? What’s your plan? How will you deal with indifference or egomania?

Your writer/coach should be quick with confidence-inspiring answers.  Look for someone who emphasizes telling a story (yes, even in a research report), clarity, and effective editing. Steer clear of those who get deep into grammar and theory. Good writer/coaches use real examples and show how it’s done.

Follow through with your swing
No writer/coach worth hiring will promise to improve your analysts’ writing in one session. A golfer won’t significantly improve her game with a 3-hour lesson. If she’s serious, she’ll take a series of lessons over the season. And writing well is harder than golfing well.

It doesn’t have to be extensive—even three 45-minute sessions over four to eight weeks with your most problematic analysts will work. But set aside budget for this. It’ll show you’re serious. And it will make whoever you hire that much more effective.

Joe Polidoro spent over a year improving the equity research reports at Bear Stearns, where he worked with past and future research stars including Lee Seidler, Lincoln Anderson, Larry Kudlow, Joe Buckley, Jami Rubin, and Steve Binder. Joe now co-heads Triplestop LLC, a marketing agency specializing in asset management and related industries.

Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.

Copyright 2010 by Susan B. Weiner All rights reserved

Tip for how to connect with your workshop attendees

Advisors, you can deepen your connection with folks who attend your investment or financial planning workshops using a technique I observed at the Financial Planning Association of Massachusetts annual conference on May 7.

Consultant Shari Harley, whom I wrote about in “How to improve your financial planning client relationships,” handed out postcards to her audience. There’s nothing unusual about that. But what she said next grabbed my attention.

Harley asked us to write on the postcard (shown in the photo above) at least one thing that we learned from her presentation that we’d like to apply. Then she promised to mail the postcards to us in one month, if we dropped them off on our way out of the auditorium.

I like Harley’s postcard idea because

  1. Her question spurs the audience to think about what was most valuable in her presentation.
  2. She gains valuable feedback when participants hand in their cards.
  3. She reminds potential clients of her existence–with their permission–when they receive their cards one month later.
  4. If audience members haven’t acted on their goals by the time they receive the cards, they may say, “I need a consultant to help me act on this.”

This postcard technique should work nicely as follow-up to any sort of financial seminar or workshop.
Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.  

Copyright 2010 by Susan B. Weiner All rights reserved

To GIPS or not to GIPS in your presentations

Must every presentation you give include the seemingly endless GIPS disclosures if your investment management firm claims GIPS compliance? For answers, I turned to Dave Spaulding,  president of The Spaulding Group and author of the Investment Performance Guy blog.

The short answer is “It depends.” When you hand someone a document containing performance data, you should either include the relevant GIPS disclosures or make sure that you’ve provided the disclosures during the past 12 months. There’s no exception to this rule. 

However, you’ve got more leeway when you make a live, in-person presentation to prospects or clients. You can’t mislead your audience. But you don’t need to include all of your GIPS data and disclosures in your live presentation. The keys are to
•    Provide enough information that your viewers understand what they’re seeing
•    Label as “supplementary” any performance information that is neither required  nor recommended
•    Hand your audience members a hard copy of your GIPS presentation

If you follow these rules, your presentations can focus on what you and your audience care most about. By the way, Dave’s presentation to the Boston Security Analysts Society on fixed income attribution was one of the top-drawing posts on my blog in 2009, so I thank him for helping to grow my audience.

Related posts
•   What does GIPS verification mean?
•   A quant’s guide to detecting a future Madoff
•   Top five tips for investment performance advertising
•  SEC update to CFA Institute’s GIPS conference
Susan B. Weiner, CFA
If you’re struggling to pump out a steady flow of good blog posts, check out my five-week teleclass for financial advisors, “How to Write Blog Posts People Will Read,” and sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

I LOVE this fixed income presentation!

“Bonds should be boring.” That’s what one head of fixed income of fixed income used to tell me. But that doesn’t mean that fixed income presentations should be boring.

Northern Trust has published the most enjoyable fixed income presentation I’ve ever seen. It’s called “Fixed Income: Almost A Bedtime Story.”

What’s so great about this post?
— Simple message, plain language
— Uncluttered pages
— Sense of humor — Oh my goodness! Northern Trust wrote an amusing disclosure on slide #23. “Psst: Fixed income may also be volatile in the future.”

These are characteristics that you can strive for in your presentations, though humor is a bit tricky. I think you need lots of experience grappling with compliance to find the laughs in slide #23’s disclosure. 

I would like to shake the hands of the team that created this presentation. It’s amazingly good. If it spawns imitators, that’ll be a great development for the folks who currently snooze through deadly presentations.

It’s not ONLY about your audience

Think more about your reader and less about yourself. That’s one of the main things I say in my writing workshops. But sometimes it makes sense to bring yourself into your communications.

Ask this question:

What aspects of myself and my life experience will help me connect with [my audience]?
–G. Richard Shell and Mario Moussa, “The Art of Woo,” Arrive (Nov./Dec. 2008)

Shell and Moussa give the example of singer-activist Bono using his knowledge of the Bible to connect with Jesse Helms, the conservative senator, on the topic of AIDS. Anchoring his pitch to their shared ideas helped Bono make his case to Helms.

You can apply these lessons to your clients, too. Use something you share with your clients to make yourself more persuasive. It doesn’t have to be religion. It could be a hobby, a dilemma, or something else.

Shell and Moussa are the authors of The Art of Woo: Using Strategic Persuasion to Sell Your Ideas.

Guest post: "What is a Visual Brand Standards Guide?"

I’m a big fan of companies using style guides to ensure consistency of punctuation, grammar, and other aspects of writing style. So you probably won’t be surprised that I also believe in visual consistency. This week’s guest post discusses your visual brand standards guide. Annie Smidt, its author, is lead designer and strategist for Seltzer.

Investment and wealth management businesses with strong branding and well-crafted, targeted messaging are connecting with current and potential clients — from Fidelity and Schwab with their high-profile “green line” and “Talk to Chuck” rebrands/campaigns to small firms who have finally taken the plunge with a professional design firm.

Once you and your designers have gone through all the work of developing a visual identity for your company, and they’ve built you some great tools, such as business cards, letterhead and a website, and maybe some ads or brochures, then what?

For the long term, you should come away from your engagement with a design firm with a strategic brand marketing plan in hand. It will outline, either in broad strokes or in great specificity, your actions and goals for your brand. Ideally, you will continue working with your design firm throughout the year and years to expand the reach of your visual brand, according to this road map.

Second of all, and more germane to the topic at hand, you should come away with a Visual Brand Standards Guide. We’ll call it a VBSG for short.

What is this VBSG?
Generally, the VBSG will be a document — printed, electronic or both. Depending on what kind of work the design firm has developed for you, it will contain some or all of the following:

Logo Guidelines. This section will give the dos and don’ts for using your logo. It will include such details of logo use and abuse as:

  • what colors it should or should not be reproduced in    what colors and backgrounds it can and cannot be placed upon —  how far away from other elements it should appear   
  • rules governing use of a tagline with the logo   
  • rules governing other graphic elements that may or may not accompany your logo    

Stationery Guidelines. This section will include information such as:

  • what typeface to use when printing on your letterhead and envelopes 
  • what the margins, line spacing and other document layout details should be used when printing on letterhead and envelope
  • if you have multiple letterhead formats (such as first sheets and second sheets, versions with and without your board listed, or other special-purpose sheets), which version of letterhead should be used in which circumstances   
  • how to format an electronic letter on letterhead versus a printed letter

Brand Palette Guidelines. Once in a while there’s a little something design-y you need to create in house. This section will give you info you need about:

  • what colors should be used in your branded communications (usually, your logo colors plus several others) — the VBSG will tell you how to specify them for different printing processes, the web or presentations   
  • what typeface(s) should be used, and where, and how should they be styled   
  • how other graphic elements that are part of your visual brand should be used
  • how photographs should be treated/used

Web Style Guide. If some of your website is under your control (most likely through a Content Management System), your style guide may include guidelines for the visual aspects of web content. The CMS will most likely also be set up to aid in the correct visual display of content through the use of various preset styles built in to the software. Your style guide might include:

  • which fonts, type styles and colors to use on your site for the various levels of hierarchical information (e.g., heads, subheads, paragraphs, captions).
  • if you should include photos, how they should be sized, oriented and placed   
  • any visual considerations for adding pages to the site

Other Guidelines. Depending on what your designers have created for you, and what the marketing plan entails, your VBSG may also include:

  • samples of and specs for on-screen presentations, including styles for charts and other information graphics
  • samples of different ads or ad campaigns and details of when they should be used and/or how they should be sized   
  • samples of and information about (akin to what’s in the web section above) email marketing campaigns   
  • samples of and information about direct mail campaigns
  • how the brand should be localized for other countries, cities or languages   
  • samples of and usage information about any other pieces that sport your visual brand: uniforms, vehicles, holiday cards, billboards, etc.

The article above is an edited version of What is a Visual Brand Style Guide, and why do you want one?” It originally appeared in Seltzer’s monthly e-newsletter.

How to punctuate bullet-pointed lists

Have you ever used a bullet-pointed list in a memo, report or PowerPoint presentation? Are you punctuating your lists correctly? Or maybe you’re not as compulsive as I am about these picky points.

Anyway, here’s what one reference book, The Grammar Bible, says:

If a sentence follows the bullet, place a period at the end. Words and phrases that follow bullets need no ending punctuation. It is never necessary to place the conjunction and before the last item in a bulleted list.



The following asset classes are used:

  • Large-cap equities,
  • Small-cap equities, and
  • U.S. Treasuries


The following asset classes are used:

  • Large-cap equities
  • Small-cap equities
  • U.S. Treasuries

Does this make sense? If it doesn’t, then post a comment with a sample bullet pointed-list. I’ll give you my suggestion on how to punctuate it.



Note: This post was revised for a grammar mistake on August 29, 2012, and expanded on May 26, 2014.

Image courtesy of adamr at