Investing is a marathon. What matters, in the long run, is multiples of capital, not just IRRs. Often we judge funds or managers basis their last one year or three-year performance and take decisions to invest or redeem. This is the single biggest cause for lower than average or poor long term returns.

Imagine a 42 km marathon; runners typically will pace themselves to ensure they have the stamina to stay the course. Some runners tire themselves out early and probably have to quit the race as they run out of energy. Similarly, in investing, managers who pile on excessive risk during bull markets look fantastic as long as the euphoria lasts, but are found naked when the tide recedes. The damage caused by this could be permanent as the loss of capital caused by impulsive decisions during a bubble phase cannot be reversed once the party ends.

Hence instead of focusing on near term returns it is important to focus on the 4Cs - clarity of philosophy or approach to investing, consistency of performance and philosophy, capabilities of the manager, class or experience of the management team across cycles. Remember form is temporary and class is permanent!

Know More About 4 C Fund Manager Process: https://www.motilaloswalpwm.com/4C-Framework