4/9/2019 Ex-Post

INVESTING ASSET ALLOCATION

Ex-Post
REVIEWED BY JAMES CHEN | Updated Jun 29, 2018

What does {term} mean Ex-Post

Ex-post is another word for actual returns and is Latin for "after the fact." The use of historical
returns has customarily been the most well-known approach to forecast the probability of
incurring a loss on an investment on any given day. Ex-post is the opposite of ex-ante, which
means "before the event."

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Ex-Post

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BREAKING DOWN Ex-Post

Ex-post information is attained by companies to forecast future earnings. Ex-post information is
utilized in studies such as value at risk (VaR), a probability study that approximates the
maximum amount of loss an investment portfolio may incur on any day. VaR is defined for a
specified investment portfolio, probability and time horizon.

Ex-post yield differs from ex-ante yield because it represents actual values, essentially what
investors earn rather than estimated values. Investors base their decisions on expected returns
versus actual returns, which is an important aspect of an investment's risk analysis. Ex-post is
the current market price, minus the price the investor paid. It shows the performance of an
asset; however, it excludes projections and probabilities.

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Analysis
Ex-post is calculated using the beginning and ending asset values for a specific period, any
growth or decline in the asset value plus any earned income produced by the asset during the
period. Analysts use ex-post data on investment price fluctuations, earnings and other metrics
to predict expected returns. It is measured against the expected return to confirm the accuracy
of risk assessment methods.

It is best used for periods less than a year and measures the yield earned for an investment year-
to-date. For example, for a March 31 quarterly report, the actual return measures how much an
investor’s portfolio has increased in percentage from Jan. 1 to March 31. If the number is 5.0%,
the portfolio gained 5.0% since Jan. 1.

Ex-post performance attribution analysis, or benchmark analysis, gauges the performance of an

investment portfolio based on the return of the portfolio and its correlation with numerous
factors or benchmarks. Ex-post analysis is the traditional approach of performance analysis for
long-only funds.

Ex-post performance analysis typically centers on regression analysis. An analyst executes a

regression of the portfolio’s yields versus the returns of the market index to determine how
much of a portfolio’s profit and loss might be the result of market exposure. The regression
provides the portfolio’s beta to the market index and the amount of alpha the fund was gaining
or losing in relation to the market index.

Forecasting
The formula forAdvertisement
calculating ex-post is (ending value - beginning value) / beginning value. The
beginning value is the market value when an asset was purchased. The ending value is the
current market value of an asset. Ex-post is a forecast prepared at a certain time that uses data
available after that time. The forecasts are created when the future observations are identified
during the forecasting period. It is used to observe known data to assess the forecasting model.

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Related Terms
Ex-Post Risk
Ex-post risk is a risk measurement technique that uses historic returns to predict the risk associated with
an investment in the future. more

Active Return
Active return is the percentage gain or loss of an investment relative to the investment's benchmark.
more

Portfolio Manager
A portfolio manager is responsible for investing a fund's assets, implementing its investment strategy and
managing the day-to-day portfolio trading. more

Post-Modern Portfolio Theory (PMPT)

Post-modern portfolio theory is a portfolio optimization methodology that uses the downside risk of
returns and builds on modern portfolio theory. more

Risk-Neutral Measures
A risk neutral measure is a theoretical measure of a market's risk aversion. more

Stalwart

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Stalwart is a description of companies that have large capitalizations and provide investors with slow but
steady and dependable growth prospects. more

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