Mutual Funds: We Don’t Know If We’ll Perform As Well In Future, But Give Us Your Money Anyway

by Vinaya HS on August 24, 2007

in Business & Management,Finance

Thanks for visiting Capital Advisor. I frequently update this blog to cover various topics on personal finance such as investment strategies, financial products that you should buy and ones that you really should stay away from, financial calculators, emerging themes such as early retirement and financial independence, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

From an ad by HDFC Mutual Fund:

How to choose a mutual fund.

Step 1. Check past performance
Step 2. Check past performance
Step 3. Check past performance

The ad then goes on to say,

Past performance may or may not be sustained in the future.

How’s that for a catch? It’s as good as saying “Handover your [hard earned] money and we’ll see what we can do with it. Whether you gain or not, we’ll get our cut, for sure, though.”

I’d like to see if fund houses trumpet their past performance during a sustained bear market. It’s certainly possible; just trumpet that you have delivered lower negative returns than whatever index your fund is being benchmarked against. Even then you’ll read that,

Past performance may or may not be sustained in the future.




Thanks for reading this article. I'd love to hear your opinion. Please use the comments section below to share your thoughts. I frequently write new articles that also cover several other aspects of personal finance including credit cards, financial goals, health insurance, income tax, life insurance, mutual funds, retirement planning, and much more. You can Subscribe through Email and receive new articles directly in your Inbox or you can Subscribe through the RSS Feed and receive new articles in your feed reader.

Previous post:

Next post: