Having been an investor, a PerTrac employee and a general statistics nerd, I have seen more than my share of performance tear sheets. While some people think of them as unnecessary, I can tell you that a good performance tear sheet can help make the case for an investment in your fund, and can also highlight why an investor should should stay with your fund through tough times. Make no mistake: A strong tear sheet isn't optional.
Logo - Your entire marketing toolkit, including your tear sheet, needs a look and feel. This is no longer optional. If you want to compete in this industry, your fund has to look like it's part of a viable, successful, long-term business. This ain't the days of two guys and a Bloomberg terminal. If you don't have a logo, get one. And with logos available for under $1,000, there are really no excuses on this front.
Contact information - You would be shocked to see how many folks have no contact info on their materials. People can't invest if they can't find you. Include the contact person's name, email, address, phone, website, Twitter handle and all other pertinent information.
Strategy description and monthly commentary - The strategy description SHOULD NOT say "Our goal is to provide attractive risk adjusted returns over a three to five year period." It should actually say what you do. If there is room, you should have a few sentences about the current month's performance as it relates to your strategy as well. This will not replace your monthly letter to investors, but it will help put the numbers folks are looking at into perspective.
VAMI Chart - a simple Value Added Monthly Index (mountain) chart versus appropriate benchmarks helps people visualize how the fund performs.
Another compelling chart - Depending on the strategy goals and attributes, this could be an up and down market outperformance graph, an underwater chart, correlation analysis, etc. The goal is to visually demonstrate to investors that your fund delivers on its promises (protect in down markets, provide uncorrelated returns, limit drawdowns, etc.)
Monthly and annual returns - Uh, monthly and annual returns. NET OF ALL FEES
Peer ranking - Shows how you do against other funds like you.
Risk/reward table - includes the relevant statistics (CAR, standard deviation, Sharpe, Sortino, maximum drawdown, etc.) versus relevant benchmarks.
Top holdings or attribution - Some type of granularity into the portfolio make-up. Solidifies the strategy in people's minds.
Manager bio - People invest in people, not vehicles. Don't miss this opportunity to connect.
Terms and service providers - If people don't know when they can get in and out of your fund, your fees, your partners (service providers), it's hard to invest.
Explanatory notes - Go to a second page (or the back of the page) if necessary. Do not squish everything else (or make tear sheet sacrifices) to fit in what can be lengthy explanatory notes.
Of course, you don't have to follow this layout exactly, but these elements should be included in some way, shape, form or fashion on any useful and compelling tear sheet. Happy number crunching!
