PERFORMANCE
DISCLOSURES
1. Performance is shown net of my fees paid by the client. Performance shown includes payment of dividends and income. Past performance is no guarantee of future results, and investing in securities may result in a loss of principal.
2. The returns were calculated on an asset weighted basis from 2001 to 2006. Subsequent years were calculated using average returns.
3. Only those accounts that were funded for the full calendar year may be counted for each year's return calculations.
4. All returns shown are net of my fees, which mean that they include deduction for all stock commissions and investment management fees.
5. If an account is initially funded six months or sooner from the start of the calendar year it will not be included in the return calculations for the upcoming year.
6. Accounts that experience an outflow or inflow of money during the year are not included in the return calculations. Prior to 2007 accounts with an outflow or inflow of more than 25% were not included in the calculations.
7. Accounts that begin the calendar year under the minimum required for that account style are not included in the aggregate composite return until the first year in which they reach the minimum.
8. There are four composites for the clients of Naworski Investments: Stock Only Non-Taxable, Stock Only Taxable, High Dividend and Asset Allocation. Performance figures for all composites are available upon request.
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Why Performance Matters
Performance is the most important factor in choosing a money manager. One would not buy a mutual fund with a poor performance history.
Long term performance of at least five years should be compared. The measurement period should cover both up and down markets--good economies and bad economies. The longer the measurement period the more reliable the past record is at demonstrating the money manager’s investment skill.
One can get lucky or unlucky over 1-2 years. Luck is eliminated over longer periods. One can be in the wrong sectors or right sectors for 1-2 years which will enhance or detract from their performance.
What is a good long term record? If the money manager has beaten the index by at least 3 percentage points per year, after deducting their fees they have done an excellent job. For a $100,000 account, that would add $80,082 over ten years versus the index.
Very few mutual funds and money managers do better than their benchmarks over a long period. If they did, they would be anxious to tell you about their great record.
