Complex Performance Evaluation of a Customized Investment Portfolio

As an investment manager for a high-net-worth client, you are tasked with evaluating your portfolio’s performance over the past year. The portfolio has been custom-tailored for the client's specific risk tolerance and investment objectives. The composite return of the portfolio was 8%, while the benchmark return was 6% for the same period. The client is interested in understanding both the relative and absolute performance of the portfolio. Additionally, the client wants to evaluate whether the investment strategy employed aligns with their long-term goals, taking into account their exposure to various asset classes.

Furthermore, you have access to the Sharpe ratio of the portfolio, which is 1.2, and the Sharpe ratio of the benchmark, which is 0.9. The portfolio’s alpha was calculated to be 2%, and the information ratio was 1.5. Discuss the implications of these performance metrics and provide a detailed performance appraisal based on the following criteria: absolute performance, relative performance, risk-adjusted performance, and adherence to investment strategy.