A return figure summarises an endpoint. It does not explain the path taken to get there, how much capital was at risk or whether the experience remained inside the mandate.
The Path Changes the Meaning
Two outcomes can look similar at the end of a period while exposing investors to very different levels of loss, concentration and liquidity pressure along the way.
- State the exact measurement period
- Show whether figures are gross or net of fees
- Present drawdown and variability with return
- Identify the data source and calculation method
- Explain material changes in exposure
Risk context does not weaken a performance discussion. It makes the discussion usable.