The primary measure of risk should be standard deviation. The concept of semi-variance is intellectually appealing but not yet a useful measure for the wealth manager. Total return should be the basic criteria for the measurement of return. This includes real time and dollar weighted returns. The primary measure of risk adjusted return is the Sharpe ratio.
Convexity is an important measure of a bond's sensitivity to large changes in rates.
We believe that wealth managers should stay abreast of useful mathematical tools and techniques and utilize them in their practices as they become useful. Examples of techniques that wealth managers should be following include semi-variance and neural networks. We believe in the Efficient Market Hypothesis over periods of five years or more. We reject the use of market timing. We use both.