A Practitioner’s Guide to Mandates, Performance, and What the Client Actually Earned
Julian R. Sterling
These are the companion files of Asset Management by Julian R. Sterling.The book on Amazon →
The four Excel workbooks that go with the book, corrected where they were wrong. Every figure the book
prints is reproduced in them by a live formula, and each ends with a Checks sheet: 160
controls, each now tested to half a unit of the last decimal the book prints, every sheet ALL OK.
Around them: the same models with the inputs emptied, thirteen working documents to print, forty questions
that mark themselves, and three cases the book names and never takes to a number.
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Twelve workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 24 September 2026.
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These carry the book’s own figures, so that every number it prints can be traced to a live
formula. Where the book is wrong, the check row says so and carries the corrected figure.
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Chapters 1, 4, 5, 7 and 14
Marchwood — the four numbers
The four returns of the mandate computed from one set of inputs, with the benchmark beside
them: time-weighted gross 5.0887, time-weighted net 4.8012,
rolling three-year net 6.8290, money-weighted net 4.1272,
benchmark 4.7455. The spread of 2.7017 points and the ratio to the net
outperformance are live cells, not captions, so both move when you change an assumption.
Revised: the spread is now taken over the four mandate returns only (the first version let the
benchmark into the range), and the gross-to-money-weighted distance is 0.9614, not the 0.9615 of
Chapter 16.
Underneath is the engine the other three workbooks share: the annual returns built from five
segments rather than typed above them, and the account run year by year — flow, opening
value, value before fees, average assets, fee, closing value, net return. Edit a segment
weight and the terminal value of 549,908,879.55 moves, and so does every
headline number in the book.
The chain-linking one year at a time, with the cumulative factor visible at each step and the
fifth root taken on the page, for the gross series, the net series and the benchmark. Beside
it, the arithmetic mean of the five years and the gap between it and the annualised return,
which is volatility drag rather than a rounding difference.
Then the scheme's own number: the cash-flow series solved for the rate that discounts it to
zero, 4.1272 per cent, with the discounting column shown so the solution can
be checked rather than trusted. The cash flows are inputs. Move the
120,000,000 out of Year 2 and the −180,000,000 out of Year 3 and watch the gross time-weighted
return refuse to move (the net one moves by a fraction of a basis point, through the fee breakpoint)
while every money-weighted figure does — including the 6,357,745.18 the timing
cost. New: the timing cost split flow by flow, 14,469,294.80 for the late transfer less
8,111,549.62 for the early payment, netting exactly (the book prints 14,469,310.14 and 8,111,557.49 and
leaves 7.47 unexplained); and the payment out was 28.5 per cent of the value it was paid
from, not 26.8.
The Brinson decomposition written out segment by segment and year by year: allocation,
selection and interaction, each from its own formula, each with its five-segment column
showing where the number came from. The row that matters is the reconciliation, which
subtracts the active return from the sum of the three and must read zero in every
year. It does. An attribution that does not reconcile is not an attribution.
The five-year averages follow — allocation 0.2582 against selection
0.1030, so 69.6 per cent of the skill was in the asset mix — with the
arithmetic sum of 0.3712 set beside the geometric outperformance of 0.3432 and the
0.0280 of compounding between them shown rather than smoothed. The second
sheet builds tracking error, both information ratios and both Sharpe ratios, and reports that
the manager beat the index on return and lost to it on Sharpe by 0.0099.
Revised: the net information ratio is the mean of the five net active returns over the tracking
error, 0.1262; the first version subtracted the compound fee drag from the
arithmetic gross mean and printed 0.1268, as the book does. A new sheet prices Chapter 3’s
benchmark decisions: rebalancing worth 0.5010 in Year 2, and a fully invested composite that is a
higher bar in three years of five, not four.
The fee schedule taken apart: what is charged at each rate, the fee, and the effective rate in
basis points falling from 28.1658 as the mandate grows past the breakpoint
and rising again when 180,000,000 leaves. Then the number for the front page of a fee
negotiation — fees took 83.7893 per cent of the gross outperformance.
The passive counterfactual runs the identical cash flows at the benchmark return and a fee
rate you set, ending at 547,495,942.65 against the active
549,908,879.55: active management finished 2,412,936.89
ahead having charged 6,263,206.77 more. The fee at which the two finish level is now solved by
running both accounts again: the index would need minus 3.08 basis points, because the
mandate beat even a free index, and the mandate could have charged a flat 36.00 before
merely tying it (the first version added the gap to the passive fee and showed 13.9). The last sheet is every three-year window on the record — 5.1900,
3.5956 and 6.8290 — a spread of 3.2334 points from the
start date alone.
The four workbooks with every input emptied. The checks sheets count what is still missing and test what holds for any inputs.
Chapters 1 to 15
Your benchmark, your flows, your fee schedule
The four workbooks with the same formulas and every blue cell emptied: the funding, the fee schedule, the five flows, the benchmark weights and returns, the portfolio weights and returns, and the passive fee. The steps stay: the Dietz weight, the trial rate, the points of weight moved, the fee concessions. Each sheet stays blank until its inputs are complete.
The book’s inputs are listed in a text file inside the archive. Type them back in and the book’s figures come back with them: 4.8012 net, 4.1272 money-weighted, 549,908,879.55 at the end of Year 5.
Thirteen pages to print and use. A4, with margins wide enough for US Letter.
Chapters 1 to 18
Thirteen working documents
The four numbers on one page, with the line every return must carry. Reading the mandate: five statements, two silences and the two paragraphs to add. The benchmark interrogated. Time-weighted and money-weighted return built by hand, with the seams to check. The fee year by year, with what is not in the net return. Attribution that reconciles. The risk page, with the years of data each ratio would need.
The benchmark as an account. The flow effect, addressed to its owner, with a line for the next known payment. Every window with its benchmark. Opening a composite. And the decision paper to retain or replace a manager, with the transition cost and the sentence for the minute.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on the mandate and the question, seven on measuring the return, seven on where it came from, seven on what the client pays and earns, six on practice, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part.
New material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapter 14 · Case one
The premium, paid from cash
Chapter 14 names the choice between funding a payment from a cash sleeve and from the whole portfolio and never prices it. Setting the 180,000,000 premium aside when the transfer arrived (the premium known in advance, the sleeve at the cash rate: ADDED) would have ended Year 5 18,347,427 higher, and cut the 0.6739 gap between what the manager returned and what the money earned to 0.0456.
That was Year 2, not skill. On the book’s own five-year means, setting the premium aside costs 3,779,826 in expectation and removes a swing of 12,838,976: the trustees are pricing a liability, not timing a market.
Chapters 6 and 12 · Case two
The fee escalator of a maturing scheme
The same schedule on the same mandate for ten more years, paying out 7 per cent a year (ADDED). The effective rate rises every year, from 28.20 to 29.81 basis points, and the escalator costs 455,383 against the 27.9668 the schedule charged over the first five years. The rate reaches 30 basis points by Year 10 at a payout of 7.22 per cent: a threshold, not a forecast.
The concession that keeps its value is the breakpoint: 150,000,000 lower saves 1,950,000 over the ten years, against 1,250,000 for five points off the headline.
Chapter 18 · Case three
The transition as a cash flow
Chapter 18 says a termination is the largest flow a scheme chooses and prices only its explicit cost. At the book’s 25 basis points plus one month out of the market (ADDED), the expected cost is 2,360,163, 4.89 years of the incumbent’s margin; one standard deviation of that month is 11,594,658, 24 years of it.
A replacement expected to beat its benchmark by 0.15 a year (ADDED) repays the cost in 2.9 years, and would need 77 years of data to show that edge at a t-statistic of 2.
an input cell; everything else on the sheet is a formula
Black text
a formula — do not overtype these
Checks sheet
the printed figure beside the computed one, to half a unit of the last decimal the book prints, with a PASS or a FAIL; the sheet ends ALL OK
ADDED
a figure the book does not give, used in the cases and marked wherever it appears
Why the checks matter more than the models
A workbook that agrees with a book proves nothing on its own — the author wrote both. What
the Checks sheets do is different: they force the model to reproduce a number that was printed
before the model existed, from a formula rather than from the number itself.
On this book the discipline earned its place twice. The portfolio weight matrix was laid out
transposed on the first build, which reproduced the benchmark perfectly and every portfolio return
wrongly — a defect invisible to anyone reading the sheet, and caught in one line by the
Checks tab. And the effective fee rate printed in Chapters 6 and 12 was checked against the wrong
quantity in the first draft of the controls; the workbook was right and the control was wrong,
which is its own useful reminder that a failing check is a question, not a verdict.
The third lesson came later, and it was about the checks themselves. Every one of the hundred compared
the printed figure with a tolerance of 0.005, and on a return held as a fraction that is half a
percentage point: the net outperformance of 0.0556 would have passed at zero. A check is only as good as
its tolerance. They now test to half a unit of the last printed decimal, and all hundred still pass. The
figures the files correct were found the other way, by recomputing every chapter line by line.
Where a shortcut and the full computation disagree, both are shown. Subtracting the four printed
returns gives a spread of 2.7018 where the unrounded series gives 2.7017; the arithmetic average
of the annual attribution is 0.3712 where the geometric outperformance is 0.3432. Neither gap is
an error, and neither is hidden.
Go beyond the companion files
Asset Management develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers; the PDF
prints on A4 or US Letter. They use no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks
to update links on opening, decline — there are none.
What changed, and when
24 Sep 2026
The four workbooks corrected: the checks now test to half a unit of the last printed decimal (160, up from 100; they used to allow half a percentage point on every return). Net information ratio 0.1262, not 0.1268. The fee at which active and passive finish level is minus 3.08 basis points, not 13.9. Four figures of the book corrected in the files: the payout was 28.5 per cent of the value it came from, not 26.8; the two flow terms of Chapter 14 are 14,469,294.80 and 8,111,549.62; the gross-to-money-weighted distance is 0.9614; a fully invested composite is a higher bar in three years, not four. Added: a blank set, thirteen working documents, forty questions that mark themselves, and three cases.
How do you calculate the Sharpe ratio of a fund?Average the excess returns over cash, divide by their standard deviation. A fund that beat its index by 0.62 a year scores 0.41 against the index's 0.45.
How do you calculate a Modified Dietz return?Gain over opening value plus day-weighted flows. A 50m inflow before a rally gives 3.25 per cent Modified Dietz against a true time-weighted 1.52.
How do you calculate the Sortino ratio of a fund?Excess return over the MAR divided by downside deviation over all periods: 0.300 / 0.7751 a month, 1.34 a year. A rival with a lower Sharpe scores 2.12.
How do you calculate active share of a fund?Half the sum of absolute weight differences against the index. An illustrative fund scores 72.5%, so its 0.75% fee is 1.02% on the active part.
How do you calculate the Treynor ratio of a fund?Mean excess return over cash divided by beta. The index scores 6.50 a year; a fund with a 0.58 beta scores 9.15 on Treynor yet trails on Sharpe, 0.77 to 0.95.
How do you calculate portfolio turnover ratio?The lesser of purchases and sales over average monthly assets: 296 / 400.0 = 74.0%, a 1.35-year holding period and about 31 bp a year of trading cost.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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