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Minimum criteria for inclusion in Best Money Managers:
- Performance must be calculated net of all fees and brokerage commissions. This means after all fees and commissions have been deducted. This standard is somewhat controversial, as the SEC requires that only net of fee numbers be presented publicly, while the CFA Institute prefers that gross numbers be presented along with a fee schedule. Since the SEC is a regulatory authority, and since complete fee schedule presentation would be impractical in this ranking format, we require net numbers.
- Performance must be calculated inclusive of all cash reserves. To explain, any given investment portfolio will hold some level of cash over a particular reporting period. Even equity portfolios which specifically seek to be fully invested in the market at all times will temporarily have dividend payments and other ordinary cash flows which cannot instantaneously be invested in the market. These cash holdings obviously will have an effect on the performance of the overall portfolio – negative when cash returns are low relative to returns of the asset class, and positive if the opposite is true. While presentation of equity-only (for example) returns may provide a valuable insight into the security selection skills of the manager, we require for comparability’s sake that performance results be inclusive of cash reserves for consideration in the rankings.
- Performance results must be calculated in US dollars, that is, from the perspective of a US-based investor. Currency holdings can have a very significant impact on the performance of a portfolio with international holdings. While this will always be the case (as we do not make distinctions between hedged and un-hedged portfolios), we require that performance must be translated into US dollars to ensure comparability to the point where these are all returns that would be seen by a US based investor.
- Performance results must be calculated on an asset base which is at least $10 million in size for traditional US asset classes (equity, fixed income, balanced accounts) or at least $1 million in the case of international and alternative US asset classes. This minimum ensures that the firm and product are somewhat established. The goal is to not taint the rankings with brief successes while also not excluding promising emerging managers. The minimum asset base requirement, therefore, is set at a level which balances these objectives.
- The classification of the product must fall into one of the categories which we rank. We only publish rankings for categories/time period combinations for which we have at least 20 contenders.