The Subtle Influences of Past Performance

November 2003
Journal of Financial Planning;Nov2003, Vol. 16 Issue 11, p28
Academic Journal
Focuses on the influences of the past performance of a mutual fund, manager or asset class to the outlook of such investments. Asset management companies advertise not just to retail investors, but also in professional trade publications. Believing that marketers choose not to waste money, it its presumed that they are allocating their money in that way because it generates the best performance. Asset management companies reinforce the importance of past performance driven by commercial instincts. The media bias extends to asset classes as well as individual managers. There are some behavioral tendencies that advisors impose on themselves. Mutual funds provide a good example. By extension, the fixation of the media and many investors on past performance is probably overdone, but not wholly without merit. It is a mistake for advisors to sort through only the investments that passed the past-performance beauty pageant, given the many other factors that influence performance. Advisors need to take a firm hand with clients and even re-think their own practices. Just because an investment has done well does not mean it still makes sense in the future, The question is whether they engage in day-to-day practices that undermine the principle either in their own analytical work, or in their interaction with clients.


Related Articles

  • Clarity Counts More Than Results. LEVAUX, JANET // Research;Jan2014, Vol. 37 Issue 1, p7 

    The article focuses on a study by the asset management company Aberdeen Asset Management PLC regarding the fund manager's investment strategy. It mentions that the study by Aberdeen revealed that 59 percent of the 201 registered investment advisors stated that clarity on the fund manager's...

  • The Fruits of Discipline. Scott, Matthew S. // Black Enterprise;Jun2002, Vol. 32 Issue 11, p238 

    Profiles the asset management firm, Ariel Capital Management Inc./Ariel Mutual Funds in the U.S. Return on the Ariel Fund as of April 11, 2002; Increase in the assets under management of the firm in 2001; Information on John W. Rogers Jr., chairman and chief executive officer of Ariel Capital...

  • More Money in Managed Accounts.  // American Banker;7/30/2003, Vol. 168 Issue 145, p12 

    Assets held in managed accounts at midyear rose 15% from the end of the first quarter of 2003, to $442.9 billion, according to data released Tuesday by the Money Management Institute. The quarterly asset total is based on reports from Merrill Lynch & Co. Inc., Morgan Stanley, UBS AG, Prudential...

  • HIRINGS.  // Pensions & Investments;2/9/2004, Vol. 32 Issue 3, p28 

    Banchile Administradora General de Fondos selected Bank of New York as a global custodian for $120 million in assets currently held by its international mutual funds. Banchile, an affiliate of Banco de Chile, offers mutual funds in the local market. The Bay County Employees' Retirement System...

  • Investment trust cost advantage eroded by RDR. Berry, Michael // Money Marketing (Online Edition);12/4/2014, p1 

    The article presents the author's views on the clean share classes' comparison with investment trusts with the retail development review (RDR) squeezing open-ended funds' prices in Great Britain. He comments that performance fees have pushed the average cost higher than Oeics and unit trusts...

  • Fund for the future.  // Money Marketing;4/15/2004, p61 

    Offers information on the CF Lord Abbett UK mutual fund in Great Britain. Amount of minimum investment; Ratings of brokers; Percentage of the investment split.

  • Equities Claim Lion's Share Of Maturing Indian Fund Market.  // Emerging Markets Monitor;2/20/2006, Vol. 11 Issue 43, p9 

    Evaluates the INR2trn Indian mutual fund industry. Influence of equities performance on industry assets; Description of Prudential ICICI Asset Management fund in India; Companies with plan to invest in thematic equity funds.

  • A layman's guide to investing on the JSE. Theunissen, Garth // Finweek;3/29/2007 Top 200, p68 

    The article provides information on unit trust fund in the business. It is stated that unit trust is a form of collective investment that is administered under a trust deed and managed by professional fund manager. Moreover, the unit trust fund will generally vary according to the type of assets...

  • Fund of funds performance data.  // Fund Strategy;1/16/2006, p33 

    The article reports that the number of funds in the Cautious Managed sector with a one-year track record has increased from 19 to 20. The fund is managed by Alan Stokes and was launched in December 2004 following the rebranding of Pharon Investment Management. The average fund performance in the...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics