Never Buy Mutual Funds Using Past Data

Research has shown that past performance over previous years will have no effect on future results of a typical mutual fund. Apart from these historical performance findings, there are basic reasons why past records are not helpful.

Managers of funds come and go; there are few who consistently are in charge of a fund’s direction. There are usually group efforts involved; the teams are always fluid.

Managed funds invariably never perform as well as the indexes they usually follow. Managers who outperform indexes in any one year are often inconsistent in following year efforts.

The only certainty you have of future mutual fund performance is to invest in those with lower costs, who invest in market indexes. ( See the Earl J. Weinreb NewsHole® comments.)