How Should a Family Judge Performance When a Manager Has a Short History?

Judge a manager with a short history by examining the people and process behind the results, while treating the performance record as limited evidence. A brief record may not show how the strategy behaves in different markets, so avoid treating a strong early result as proof that the manager can repeat it.

Understand What the Record Covers

Ask how long the strategy has operated, which investments are included, and which team members made the decisions. If the manager cites work at a prior firm, establish what those people did, what resources they had, and whether the current organization has similar incentives and support. A record assembled from multiple sources may be useful, but only when the manager explains the pieces and their limits.

Review the underlying positions and decisions, not only the summary return. Ask what drove gains and losses, how the manager valued less liquid assets, and whether results were produced with the risks the family expects. Check the stated strategy against actual holdings. If results are too new to show a full range of conditions, say so plainly in the family's review notes.

Give Process and People a Close Review

Ask the investment team to explain how it sources opportunities, decides what to buy, manages exposure, and responds when an investment thesis weakens. Request examples that show how the process works in practice. Speak with people who have worked with the team, and confirm the responsibilities of anyone presented as part of its track record. A clear, consistent explanation matters because the family needs to understand what it is relying on.

In interviews included in The Family Office Book, family office executives describe looking at a manager's people and process alongside performance. One explains that a shorter record can be weighed against a longer one, while the team's work and the fit of the opportunity still matter. That is a useful frame for a family: assess what evidence exists, what evidence is missing, and whether the process gives you confidence beyond the early results.

Set Limits While Evidence Accumulates

A family can reduce dependence on an unproven history by limiting the role the manager plays in the overall portfolio and setting clear review points. Define what information the manager must report, what would trigger a closer review, and how the family will evaluate adherence to the stated strategy. The allocation should reflect uncertainty as well as potential return. Do not rely on a short record to support a commitment the family cannot comfortably hold through a difficult period.

Document the reasons for proceeding, the open questions, and the evidence that would change the family's view. Compare the manager with alternatives that have longer records, but do not assume a longer history alone settles the decision. For fund terms, reporting rights, or tax consequences, talk with your attorney or CPA.

Read next: What evidence helps verify an investment manager's track record? and How can investors tell whether a manager's strategy is repeatable? and How should a family office set target returns for each part of its portfolio?

We really deemphasize in our manager due diligence process and our manager selection process, we deemphasize the past performance and we really want to find an investment team and execution that makes the most sense.

Sources: The Family Office Book. Informational only, not financial, legal or tax advice.