Published on Schultz Collins Lawson Chambers, Inc. (http://www.schultzcollins.com)

Why doesn't SCLC market the firm's performance history?

In order to protect the public, strict guidelines on performance reporting have been created by the SEC [1] (Securities and Exchange Commission) and the CFA Institute [2]. Since we are investment counsel, supervising custom portfolios, each with unique investment objectives, asset allocation structures and investment positions, and because we do not take discretion over client accounts, CFA Institute Performance Presentation Standards [3] preclude us from reporting composite returns.

We believe in any case that reliance on track record is not a prudent method of selecting an investment advisor [4]. In relying on recent track record, the investor makes an important decision on the basis of a relatively small and statistically insignificant data set. Although most investors realize that risk is related (in an approximately linear fashion) to reward, superlative track records can obscure this important relation. But the relation is inescapable, and will inevitably assert itself. After all, the manager with the best track record over the period just ending has succeeded by virtue of a strategy informed by an economic situation which is necessarily about to change, thereby undermining the strategy.

up [6]
Source URL:
http://www.schultzcollins.com/faq/trackrecord

Links:
[1] http://www.sec.gov/
[2] http://www.cfainstitute.org/
[3] http://www.cfainstitute.org/standards/pps/
[4] http://www.schultzcollins.com//files/track_record.pdf
[5] http://www.schultzcollins.com/faq/targetclients
[6] http://www.schultzcollins.com/faq