Much Ado About Nothing: Does the choice of “day count
method” materially affect the return annualization outcome ?
We wouldn’t fault most of you for thinking this was a
peculiar topic to kick off the New Year with. But there is a good explanation
behind this specificity; a thought-provoking question raised by one of our
clients during the last reporting cycle of 2021.
Our client was custom configuring the day count method
to 365.25, so the calculation engine within Assette could replicate the numbers
from their portfolio performance & accounting systems. During this process,
our client was curious to know what other day count methods were accommodated
within Assette and if there was a preferred “standard” among industry peers. So, we dove in and examined the key issues surrounding
the lack of standardization in day count methods.
Download the PDF to see what we discovered and what the client decided on in the
end. And don’t forget to share your thoughts with me on Linked In. I would love to hear how you approach day count method.