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When You Take the “Picture” Matters

Investors often look at portfolio results over trailing periods (such as the last five years) to gauge how well their portfolios performed compared to designated benchmarks. Trailing period returns are frequently used both for assessing a manager’s performance as well as using asset class returns to assess how asset allocation decisions have affected the portfolio.

Both asset class and manager results are end-point sensitive. This can have a dramatic effect on returns and at times can be misleading. To illustrate this effect, we  used the recent trailing five year period to display how impactful adding a newly-completed year (2013) and subtracting the oldest year (2008) can be.

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