This is a good time for a review of the academic literature on evaluating portfolio performance, concentrating on professionally managed invest- ment portfolios. While the literature goes back to before the 1960s, recent years have witnessed an explosion of new methods for perfor- mance evaluation and new evidence on the subject. We think that several forces have contributed to this renaissance. The demand for research on managed portfolio performance increased as mutual funds and related investment vehicles became more important to investors in the 1980s and 1990s. During this period, equity investment became widely popular, as 401(k) and other defined-contribution investment plans began to dominate defined-benefit plans in the United.
