Two of the most useful parameters to evaluate a fund manager's track record are yearly ROI and maximum drawdown. ROI, or "return on investment", is the percent return on the initial balance, usually over the course of a year, while the drawdown is the peak-to-trough decline during a specific record period of an investment and is an excellent measure of the risk involved.
ROI and maximum drawdown values tend to be more and more accurate as the number of trades grows: the reason for this is simply because, if you only evaluated them during a single month, you wouldn't consider the case where the trading strategy in use generates most of its profits (or losses) from a trade setup that only occurs rarely, such as once or twice a year.
Other useful parameters include the asset diversification, the expectancy of the system used by the manager, the typical reward-to-risk ratio used on the positions, and the money management method in use: in particular, it is important to know what is the risk percentage on your total account used for every opened trade.
Keep in mind that a good investor will never risk a big percentage of his account in a single trade because, if things go wrong, breaking even gets more and more complicated as the risk percentage grows. For instance, a trader would have to make 5.26% of the account back to compensate for an initial 5% drawdown, while he would have to make 100% back to recover from a 50% loss.
