it should come as no surprise that many of the managers who outperformed their peers in the first 5-year period did not do so in the second 5-year period, and vice versa. Another tracking mechanism that can cause confusion is the reporting of mutual fund returns, often inflated when compared to actual long-term returns. The discrepancy arises from neglecting to account for funds that have closed or merged, resulting in the higher average returns of only surviving funds included in calculations. When funds go under, their records are stricken from databases, creating a survivorship bias. This bias Figure 5-4
Published on Jun 1, 2015
This book reveals the potential land mines and pitfalls of active investing and educates readers on the benefits of passive investing with i...