While you will no doubt have seen many notices about past performance being no guide to the future, you should certainly consider how an investment you are thinking of making has performed historically, and you should review their approach to managing risk too.

 

Investment returns tend to be cyclical. One style or market segment may perform well for a period of time, and then start to lag behind previous results during next period. Value and growth-investment styles goes in and out of fashion and some industries can experience sudden unexpected regulations and changes in market conditions, such as when the tech bubble burst. However, that’s not to say performance is not a consideration. It is just that it should be one consideration out of many when choosing an investment.

 

Rather than looking at performance figures for the last year, go further back if you can over the medium and longer term to determine whether performance has been reliable over the longer term. How far back you can track investments depends on the market the strategy is investing in. Digital currency investments are a new market, so longer term track record does not exist. With new markets such as this, it is always important to consider if and how much leverage has been applied, and how the program manages its risk.