28 March 2012

Beware of selective performance statistics

The first quarter of 2012 is nearly over and it has been a good one for markets. Inevitably some fund managers (or better some of the funds in their product line up) have done well and are not slow in trumpeting their achievements. But investors should be careful when listening to the siren songs of marketers or investment advisers. A fund that did well over the past three months may not look so good when scrutinised over a one or three year period. Even when a fund passes muster over the longer periods there might be other - and larger - funds managed by the same firm or individual that can show at best a mediocre performance. That leaves the poor investor still with the difficult (impossible?) choice of picking the right fund.