FYI: Quick summary: While it’s generally assumed that the best funds don’t underperform for long, that’s not the case. Winning funds—which I defined as those that have beaten their Morningstar category index since-inception (over a period not less than ten years)—lagged their index in about three of every ten rolling ten-year periods during their lifetime, on average. And it’s not a mean reversion story per se—these performance setbacks appear to have occurred at various stages of the winning funds lives’, not just in the last few years as returns began to roll over. What it means is that even in the best-case scenario–picking a fund that proceeds to win over its lifetime–there will be plenty of doubt-inducing moments along the way.
Regards,
Ted
http://syouth1.tumblr.com/post/140620821675/when-winners-fail
