Backtesting is not the way forward for structured products
The use of backtesting to provide investors with a useful way of making investment decisions when buying structured products continues to be discredited, so isn't it time for future projections only?
There is peril if you look back, confusion if you look forward, but no way that you can stand still. The backtesting of structured products is considered poor form by many regulators, some of which are driven to ban the whole practice, while others express doubt about the practicality of using future projections to provide any reliable or understandable assessment of a structured product's quality.
The extent of views on backtesting range from those of the International Organization of
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