Monday
Funds: Does Past Performance Matter?
Mutual fund advertisements and prospectuses routinely warn investors that "past performance is no guarantee of future results," but that statement doesn't go far enough, according to a recent study.
A study made dozens of comparisons to find out how often top-quartile funds for a given period managed to stay in that elite group during the ensuring period.
The results? The study found that funds rarely maintained their top-quartile rankings. Top-quartile funds during one-year periods managed to maintain their high ranking the following year only 30 percent of the time.
The results for three- and five-year periods were even worse. Less than one-fifth of funds with top-quartile three- and five-year returns repeated the feat during the ensuing three- and five-year periods.
Investors often focus on past performance, but past performance doesn't tell you much about how a fund will perform in the future. It is important to put a fund's returns into context, so you can figure out why the fund performed the way it did. more..
A study made dozens of comparisons to find out how often top-quartile funds for a given period managed to stay in that elite group during the ensuring period.
The results? The study found that funds rarely maintained their top-quartile rankings. Top-quartile funds during one-year periods managed to maintain their high ranking the following year only 30 percent of the time.
The results for three- and five-year periods were even worse. Less than one-fifth of funds with top-quartile three- and five-year returns repeated the feat during the ensuing three- and five-year periods.
Investors often focus on past performance, but past performance doesn't tell you much about how a fund will perform in the future. It is important to put a fund's returns into context, so you can figure out why the fund performed the way it did. more..
Comments:
Post a Comment
