How does an investor interpret a track record in judging the performance of a CTA?
Investors should take particular note of the Trading Advisors Performance Record. However, this in itself should not be the sole reason for choosing a specific CTA. As mentioned above, the Disclosure Document spells out an advisors philosophy and trading style. This should be reviewed along with the track record in making your decision. Track records are important and should show performance tables, spanning several years or more. A strong performance over a short period of time may be nothing more than good fortune. However, positive performance over a long period of time especially in markets that have experienced bull bear and flat trading ranges speak volumes about a CTA´s trading abilities. Track record Components to take careful note of: Length of the trading programGood fortune or Sustainable Investing? Worst Peak to Valley drawdownCould your account be profitable assuming worst entry? Assets under Management Has the manager significant assets under management?
