Show clients the bad years, not just the average
Every advisor has had this conversation. The client asks what happens if markets fall, you say something accurate about long-run averages, and you watch them not believe you.
The problem isn't the number. It's that an average describes a journey nobody took. What people actually want to know is how bad it got, how long it stayed bad, and whether they'd have coped.
What it shows
Maximum drawdown — how far below the peak it went
The single most useful number in a client meeting. Not "it returned 7% a year" but "at the worst point it was down this much, and it took this long to get back". That is the number that determines whether someone sells at the bottom. What drawdown means →
Volatility — how much it moved around
Two portfolios can end at the same place having put the client through completely different experiences. Volatility is the measure of that difference, and it's usually the honest reason a client is uncomfortable even while their statement looks fine.
Year-by-year returns
A table of every individual year, not a smoothed curve. Clients read the bad rows first, which is exactly the point — better they meet them here than in a statement.
Risk-adjusted return
Sharpe ratio, for comparing whether extra return actually paid for the extra bumpiness, or whether the client simply took more risk for the same result. What Sharpe ratio means →
The market-timing objection, answered by running it
"I'll wait for a better entry point" is the most common reason a client delays, and the hardest to argue against, because arguing sounds like a sales pitch.
The timing scenario stops it being an argument. It runs the same portfolio under deliberately unlucky entry timing — including investing at the worst possible moment — and shows what actually happened afterwards. The client sees the outcome of the thing they're afraid of, computed rather than asserted.
In most historical cases the answer surprises people, which is why showing it works better than explaining it.
Macro scenario builder
Beyond history, you can shape a scenario — what if rates behave a certain way, what if growth slows — and see how the portfolio responds. Useful when a client's worry is specific and current rather than general.
Shares and funds, including mutual funds
Many backtesting tools only handle listed shares and ETFs, which makes them useless for the funds most advised clients actually hold. The Backtester handles mutual funds too, priced on their published net asset value.
Point-in-time, not hindsight
A backtest that quietly uses information nobody had at the time will flatter any strategy. CORVIX's backtests are point-in-time — each date only knows what was knowable then. Why point-in-time matters →
Questions advisors ask
Does it handle mutual funds, or only listed shares and ETFs?
Both. Mutual funds are priced on their published net asset value. This matters because most advised clients hold funds, and a lot of backtesting tools only support listed instruments — which makes them unusable for the portfolios advisors actually deal with.
How far back does the history go?
As far back as the instruments themselves have data. A portfolio of long-established funds can be tested over decades; one containing a fund launched three years ago is limited by that fund.
What exactly does the timing scenario do?
It re-runs the same portfolio under deliberately unlucky entry timing, including the worst possible moment in the period, and reports what happened afterwards — including the maximum drawdown that entry produced. It is for the client who wants to wait for a better moment.
Is the backtest point-in-time, or does it use hindsight?
Point-in-time. Each date is evaluated using only what was knowable then. Backtests that quietly use later information make every strategy look good, which makes them worthless for setting client expectations.
Can I show this to a client directly?
Yes, and that is the intended use. The drawdown and year-by-year views were designed to be read by someone who isn't a professional investor.
Does a good backtest mean the portfolio will perform?
No. A backtest describes history, not the future, and CORVIX says so inside the tool itself. Its real value is preparing a client for the size of fall they should expect to sit through.