This paper presents a method of performance measurement and attribution analysis, which is based on values rather than returns.  The difference in final values between a managed fund and its benchmark provides an exact measure of the contribution of the fund manager to the wealth of investors.  It is natural for investors to be interested in the manager's contribution, as well as the manager's skill.  The paper shows that multi-period attribution analysis in terms of values is relatively simple and transparent, and that it enables precise customized analyses to be made of the manager's contribution for each investor in a fund.

A Value-based Method of Measuring Fund Performance