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The Key Time Frame To Use When Evaluating A Fund’s Performance

TedTed
in Fund Discussions
FYI: We’ve all heard the line about past performance not being indicative of future returns, but when looking at mutual funds the historical data is still worth paying attention to. Yes, a fund’s expense ratio, strategy and tax efficiency all matter, but a fund could look good on all three fronts and still have terrible performance. You want a fund that’s likely to best its peers, and past performance can offer some clues.
Regards,
Ted
http://blogs.wsj.com/experts/2016/04/05/the-key-time-frame-to-use-when-evaluating-a-funds-performance/

Comments

  • rforno
    edited May 2016
    These days, 5 years isn't a useful metric at all ... since the GFC all fund performance returns have been goosed by QE 1-4 and related artificial support around the world. When 5 years passed since 'the bottom' fund managers and their PR folks were gleefully preparing new info sheets to show awesome 5-year performance to anyone who would listen.

    For a mutual fund I will *start* at ten years. Right now, I want to see how a fund was positioned going into the GFC ... that to me gives great insight into how the managers think and how beholden (or not) to the Wall Street 'herd' mentality they are during the latest mania/bubble/groupthink. IE: were you an equity fund and lost only 20% in the GFC versus 35-40% in your same category? I'm interested....why was that?


  • TedTed
    @rforno: I believe that's true of any time period.
    Regards,
    Ted
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