I’m completing a report for a client who asked me to review their performance measurement system and processing. They offer their clients the option of treating flows as middle-of-day events. I strongly oppose this method.

First, there’s a reduction in accuracy: we value portfolios at the start and end of day, but not at the middle. Thus, we’re not having an exact method (which we’d have with start- or end-of-day treatment) but an approximate method.

Second, I believe the reason firms choose this is simply because they can’t decide whether to use start- or end-of-day.

The answer, I truly believe, is:

• Inflows: treat as start-of-day events
• Outflows: treat as end-of-day events

and don’t bother with midday.