For those of you who read my blog posts or receive our emails, you'll know that Standard and Poor's compiles some very interesting information on mutual fund manager performance versus their benchmarks. The SPIVA Scorecard is a piece that I reference often.
Today, I ran across a new paper from S&P, The Persistence Scorecard. This report looks at performance persistence in mutual funds. For example, let's say a broker tries to sell you a fund whose manager has been on fire this year, beating the market by 10%. Should you take this as an assurance that you will enjoy these lofty returns into the future?
Without retyping the entire article, I'll relay one of their findings that essentially summarizes the findings. Over the three year period ending March of 2013, out of the top 25% of all performing US Equity funds at the start, only 4.69% of those funds remained in the top 25% of performers at the end of the 3 year period.
So, if you are entertaining purchasing a fund just because of its manager's stellar record, you may want to reconsider that decision, and find other, better criteria for fund selection.
No comments:
Post a Comment