What aspects of performance should I view besides market returns?

It’s important to consider that, while the time-weighted return may be the most helpful type of return figure to use when evaluating your portfolio manager, there are many other factors you should consider when evaluating your portfolio manager. Taxes saved now or at withdrawal from our services like TaxMin, Tax Loss Harvesting+, or Asset Location aren’t reflected in pre-tax returns. Also, you should not expect your time-weighted return over a short time horizon to be representative of the performance of your portfolio manager.

As with any data, the larger the sample size, the more representative the information you’re looking at. To consider a long enough time frame in considering the performance of a portfolio, a good rule of thumb is to look at the annualized time-weighted return over 12 or more years. That may seem like a lot, but market trends are bound to flip — even after stretches of consistent performance over a few years — so even looking at returns over a period of five years leaves your guess at which portfolio manager is performing better largely up to chance.

Arguably even more important than being invested in a well designed portfolio is how long you are invested in that portfolio. Research on returns in the S&P dating back to 1928 suggests that how long your funds are invested is generally one of the most important factors in achieving high returns.