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In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Tom Madell, PhD Mutual Fund/ETF Research Newsletter

Key Points:

° Over the last 25 years, exceptionally outstanding fund performance nearly across the board was followed 5 years later by poor performance; this happened beginning in 2000, 2007, and 2014.
° When only a small number of funds excelled after the 2007-09 bear market, all were doing poorly by 5 years later.
° In early 2015, funds that were previously among the biggest performance winners suffered sharp dropoffs by 2020; the table below shows these funds and how badly they wound up doing.
° If these trends continue, the funds I list doing unusually well right now may not be your best choices for the next 5 years.

November Edition


  • beebee
    edited October 2020
    It's interesting to look at 10 and 15 year performance of different mutual funds. If a fund has an impressive 10 and 15 year return (above average), but has struggle over the last three to five year period I look for reasons why. Sometimes it's a reason to stay away. Sometimes it's a reason to add to my watch list.
    Energy/Natural Resource funds and also value tilted funds seem to be full of under performer right now.
  • During the pandemic, energy demand for transportation and traveling has reduced considerably to a point that layoff are increasing among large oil companies. Many fracturing firms have bankrupted in spring as oil prices fell below $40/barrel.

    FAANG stocks have dominated the market in recent years. My growthier funds are doing well while the value oriented ones are trailing badly. This year in particular the difference is over 20% ! At some point in the future everything revert back to the mean.
  • I thought that the newest newsletter contains valuable perspective on the hot funds for one decade tend to underperform during the next decade. Consequently traders who select funds on their most recent decade's performance will probably underperform the general market. "Performance chasing" is not a rewarding strategy. This is an excellent newsletter!
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