The statement must also acknowledge that the organization has implemented reasonable procedures and controls in an effort to preclude imprudent investment activities. This includes buy, hold, sell and timing decisions. The Beta calculation should include any cash position in the portfolio. R-Squared is a statistical evaluation to measure similarity in behavior of the portfolio to the market. The annualized Alpha should be greater than the managers fee essentially showing that value is being added for the risk taken.
Alpha measures the excess return for the amount of risk taken.
Portfolio turnover will be monitored. If the performance results of the portfolio meet the objectives stated herein, the rate of turnover in the portfolio will not be an evaluative factor. However, a portfolio turnover higher than the average of similar fund managers is considered a negative. Files will be maintained on investment firms with which the University deals. The files will contain financial statements for the firms and NASD reports for the brokers and firms or other appropriate documentation that supports the financial stability of the firms.