Can You Win Big by Not Losing Big? Almost

On average, mutual funds that provided consistent second-quartile performance year to year did not provide top-quartile performance over a five-year period. The problem is turned on its head in this article, to determine if merely avoiding the bottom-quartile bucket on a yearly basis was sufficient...

Full description

Saved in:
Bibliographic Details
Published in:Journal of Financial Planning 2005-12, Vol.18 (12), p.20
Main Authors: Riepe, Mark W, Swerbenski, Bill
Format: Article
Language:English
Subjects:
Equity funds
Financial analysis
Mutual funds
Portfolio performance
Professional golf
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:On average, mutual funds that provided consistent second-quartile performance year to year did not provide top-quartile performance over a five-year period. The problem is turned on its head in this article, to determine if merely avoiding the bottom-quartile bucket on a yearly basis was sufficient to propel a mutual fund into the top-quartile ranks over a five-year period. The author began by examining all domestic equity funds as classified by Morningstar beginning at year-end 1996. In the understatement of the year, with lots of bottom-quartile finishes, it is hard to win any long-term performance battles with your peers. Somewhat surprising is how big a dropoff there was in average five-year performances with even one year in the bottom quartile.
ISSN:1040-3981