IF there is one warning label that seems to have little effect, it is the one on the bottom of a securities prospectus: “Past performance is no indication of future results.” Yet according to a NY Times report investors regularly ask for a mutual fund’s track record over one, three, five years or more before putting their money in. Sure, the fund may keep going up, and the past performance is an indicator. But what happens if the fund starts to drop? Should the investor sell, or hang on because the fund did well in the past?
A report released this week from Barclays Wealth and Investment Management, “The Science and Art of Manager Selection,” aims to lay out the risks of trying to read past performance into future returns when selecting active managers — as opposed to passive management of your money through index and exchange-traded funds…
Read all about it at http://www.nytimes.com/2012/03/31/your-money/what-to-look-for-in-an-active-investment-manager.html
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