FYI: “Past performance is not an indicator of future outcomes.”
That’s a variation of a disclaimer you’ll see in mutual fund marketing materials.
“Yet, due to either force of habit or conviction, investors and advisors consider past performance and related metrics to be important factors in fund selection,” S&P’s Aye Soe writes.
Specifically, investors will often find themselves attracted to the funds with the best track records, believing that there is some magic touch there that’ll result in persistent riches.
Unfortunately, data shows that the exact opposite is true
Regards,
Ted
http://finance.yahoo.com/news/mutual-fund-past-performance-scorecard-171510113.html
Comments
Nothing new here. The SPIVA scorecard has been released biannually for a long time. Although the numbers change a little with each study release, the primary findings are invariant.
Active fund managers are always on the short end of the rewards spectrum when compared to passive Index benchmarks. The percentage of active managers who do outdistance their benchmarks is always disappointingly low, and that low percentage decreases as the timeframe expands. Performance persistency is not typically the strong suit of active fund management.
Here is a Link to the SPVA scorecard:
https://us.spindices.com/search/?ContentType=SPIVA
This post ties together with a recent earlier submittal by Ted. That earlier post addressed the issue of diaappearing heavy weight fund managers. Here is the internal Link to that companion article:
http://www.mutualfundobserver.com/discuss/discussion/29075/chuck-jaffe-whatever-happened-to-the-heavyweight-mutual-fund-managers#latest
Enjoy.
Best Wishes.