Corey Hoffstein recently posted an article titled Are Three Year Track Records Meaningful? His take on a topic that we are more than familiar with, is worth the short read.
We spend time with firms of all shapes and sizes in this industry daily. “We will take a serious look once you have a 3 year track record,” has to be the most common response we hear when introducing a new strategy. 36 months is the default rite of passage time period to truly get the tires kicked on a new strategy. In some cases, that probably makes plenty of sense, but does it in all of them? Is requiring the 3 year track record the best way to carry out your obligation as a fiduciary? Or should process and the evidence supporting it carry more weight? What about transparency and structure of the offering, or correlation to existing managers, or…. this list goes on.
Check out Corey’s post if you haven’t already. He’s brilliant and consistently puts up great content that will get you thinking.