Time is Necessary to Evaluate Performance

If one of our portfolio managers has one great year, it doesn’t factor at all into how he or she is paid. That could just be a random event. I think it’s actually a stretch to say five years is long enough to be relevant, but I realize not everyone has the same time frames. Clients do have finite patience, so I consider five years a decent compromise between what clients will give you and what we think is the minimum necessary to have any statistical significance.