All the mutual fund ads tell you right up front: Past performance is no guarantee of future results. A study from S&P Dow Jones Indices shows how true that is. The study looked at all funds that were in the top 25 percent of all performers in March of 2012. The next year, just 19 percent of those funds repeated in that top quartile.
The news got worse after that: Two years out, only 3.8 percent of the funds from the first group of top performers had maintained that status for the full two years. The best group for consistency was small-cap stock funds, but even those placed only 4.1 percent of their top performers for two years running.
It's not easy to stay on top. That's just one more reason you want active management for your mutual funds, like we offer here at Echelon Wealth Strategies.
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