Chasing Past Performance
Posted on 7th June 2024
You might be inclined to select investments based on past returns, expecting top-ranked funds to continue delivering the best performance
But can they maintain that outperformance? Research shows that most funds ranked in the top 25% based on five-year returns didn’t remain in the top 25% in the next five years. In fact, only about one in five equity funds stayed in the top-performing group, and only about a third of fixed income funds did. The lesson? A fund’s past performance offers limited insight into its future returns.
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