The GPDF is used to examine whether input-like values, like portfolio P/CF and P/B as well as TER, represent an efficient user cost with respect to performance metrics, in other words, traditional indices such as Sharpe ratio and Jensen's alpha.
In the first stage of the analysis, three DEA runs are performed employing the GPDF using Equation 1.
What is unknown is the reason for the variations in such performance patterns, and that GPDF metrics may not be enough for both consulting purposes and policy analysis is evident.
First, in the GPDF, the sample of observed ETFs can be classified in terms of those located on an efficient (in the DEA context) frontier and those that fall below the frontier.
Fund managers can greatly benefit from the information provided by GPDF performance scores.