Every allocator has seen the pitch: a dazzling one-year return, a strategy that claims to have “cracked the code,” or a manager with a meteoric rise. But as any seasoned professional knows, true talent reveals itself over time, not in a single market cycle or a lucky streak. The three-year track record stands as a minimum threshold for a reason. It’s not about arbitrary timelines; it’s about observing how a strategy and its manager perform across different market conditions, volatility regimes, and, yes, inevitable setbacks.

A three-year window allows for meaningful track record verification and operational due diligence (ODD). It’s long enough to filter out the noise of short-term luck and capture the impact of risk management decisions, market sentiment shifts, and even the occasional drawdown. This period also provides allocators with enough data to stress test performance, analyze risk metrics like volatility and Sharpe ratio, and evaluate the consistency of alpha generation.