How to monitor your 'execution'

While the executions we have in mind are less blood-curdling than the one you might see in your typical Horror Movie they are of critical importance for you financial well-being. We are talking about how well your orders to deal in shares, bonds or foreign exchange are handled by your broker or financial adviser. Any amount of 'slippage' - even if not due to malice - is a drag on the performance of your portfolio. The more often you turn over your investments the more importance is careful monitoring of execution costs. The lackadaisical regulation of 'dark pools', 'high-frequency trading' and 'predatory algos' have made it more difficult - but even more important - to keep a close watch on executions.

Trust is good, control is better

Slippage in its most basic form means the difference between the expected price of a trade, and the price the trade actually executes at. This can be due to fast moving markets and is caused by the delay between the placing of an order and the time it reaches the market. Slippage can also be due to mishandling or even abuse by the broker that is entrusted with executing the order. So investors should regularly scrutinise the handling and execution of their investment transactions. An ongoing controversy between major participants in the financial markets illustrates that not even sophisticated investors are immune from becoming victims of poor order handling.

Are you watching your 'executions'?

No, we are not talking about people being shot, but in this context one could say that investors might get executed, not literally of course, but in the sense that the size of their portfolios gets 'executed'. A lawsuit filed against a prominent investment management firm in the United States illustrates that investors have to be on their guard and carefully monitor not only the investment allocations made by their advisers but also the way that the investments are implemented. The expenses connected with 'executing' investments can be a serious drag on investment performance - even if all deals are above board.