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Articles

An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”

Benjamin Graham, The Intelligent Investor (1949)

 

As a mission, Phocion sets out to elevate operating control standards within the investment industry. It accomplishes this by focusing on three core areas:

  • Performance
  • Operational Due Diligence
  • Compliance

Phocion authors meaningful articles that enlighten and educate the investment industry. The articles influence the industry towards greater integrity and away from the “speculative” nature of operations that Ben Graham referred to in his opus magnum.

February 20, 2014

Relying on GIPS Verifiers to Maintain Compliance

The decision to become GIPS compliant is a significant one in an investment firm’s progress. GIPS compliance represents an increase in transparency and fair representation of performance. The overall objective of the GIPS standards is “…to provide an ethical framework for the calculation and presentation of the investment performance history of an investment management firm.”[1] Reaching
January 7, 2014

Operational Due Diligence: The Forgotten Part of Due Diligence

The evaluation and selection of investment managers is dominated by an Investment Due Diligence process focused on strategy, performance, and client objectives. Often overlooked and considerably undervalued, is the Operational Due Diligence process which looks into the quality of a firm’s operations. As a necessary component of a complete due diligence process, it can be
November 5, 2013

Missing Out On Performance Measures

There is a differing opinion on the use of IRR (Internal Rate of Return) or TWR (Time Weighted Return) in performance measurement of investment firms, individuals and their portfolios. Some investors and firms prefer the IRR as it is viewed as a more complete return measure while others prefer the TWR, which focuses on the
June 5, 2012

Valuation

While the world economies are still trying to recover from the global financial crisis of 2007-08, much discussion has been spent on the causes behind the crisis. Among others, there were significant failures in risk management, regulatory oversight, in the Fed’s mortgage lending standards, and in the valuation policies and processes of investors. The importance
March 16, 2012

The Bridge Competition

On March 6th, 2012, former Texas tycoon R. Allen Stanford was convicted of pilfering $7 billion of investors’ money through a Ponzi scheme. In my beloved city of Montreal, victims of another Ponzi scheme run by Earl Jones reached a $17 million settlement agreement with the Royal Bank of Canada. The victims contended that the
December 21, 2011

Going Beyond GIPS

 Introduction Global Investment Performance Standards, better known as GIPS, are a voluntary set of standards established to create transparency in the calculation and presentation of performance. From improving the credibility of compliant investment firms to providing clients the ability to fairly evaluate the performance of these firms, GIPS has arguably become the gold standard in
October 31, 2011

Why Fund Sponsors Are Failing

Introduction I was in the process of working on a blog about why fund sponsors were failing the funds and their pension beneficiaries. The blog was going to focus on the role sponsors take in the management of the fund, identify their shortcomings and propose solutions. On Monday the 17th of October, as is my
September 27, 2011

The Noise of Daily Performance

Looking back, it is hard to remember a world without the presence of the 24 hour business media. The likes of CNBC, Bloomberg TV and Fox Business News  are constantly inundating us with information that is presented as informative, necessary and most importantly, actionable. Further analysis into what is being said would reveal that most
September 27, 2011

Don’t Overlook Benchmarks

Investors are presented with a barrage of marketing material from funds and managers trying to raise capital, and what all these reports have in common is that they all focus on performance. That is not surprising considering the relatively large number of funds available with the few strategies being used, managers feel they can only
September 26, 2011

Avoid Turning your Investment Firm into a Technology Company

As information technology’s development accelerated, the investment industry took notice and began developing systems that would automate formerly manual tasks. Over time these systems have evolved into something more. While their benefits are continually vaunted by vendors and end users alike, the processes of ensuring that these systems are properly implemented and maintained belong, first