FYI: Mutual fund investors’ tendency to chase past performance has been well documented—funds with superior relative performance within a category attract the lion’s share of future cash inflows.
For example, the study “Morningstar Ratings and Mutual Fund Performance,” by Christopher Blake and Matthew Morey, found that an amazing 97% of fund inflows went to four-star and five-star funds, while even three-star funds experienced outflows.
Regards,
Ted
http://www.etf.com/sections/index-investor-corner/swedroe-underperformance-can-mean-more-risk
