Discussion Rooms

The Q4 drawdown in small-cap heavy PMS strategies was brutal — some strategies saw 22-28% peak-to-trough. Anyone re-evaluating their manager allocation after this?

That's exactly why I always look at maximum drawdown before CAGR. A strategy with 18% CAGR and 40% max drawdown is a very different beast from one with 15% CAGR and 18% drawdown.

Worth remembering that PMS taxation makes this even worse. If your manager panicked and churned the portfolio to cut losses, you're realising STCG on every sale. The post-tax damage is worse than the gross return shows.

This is why I specifically ask managers what they did during the March 2020 crash and the 2022 rate-hike selloff. The answer tells you everything about their conviction vs. their marketing.