Dialogue

Nov 28 2011
Print

Past Performance Numbers Should be Read with Extreme Care

This article by Brian Bridger shows how, compared with reports issued three months ago, three year fund performance numbers look remarkably better (having omitted the September and October 2008 period when there was heavy losses in funds) and suggest lower volatility despite many funds having current negative returns.  Investors should look at averages over a longer period of time and over various time frames, says Bridger, in order to understand the full story. We would also add that benchmark returns over the same time period would provide context to mutual fund performance; these are not currently required to be provided in performance reports, but FAIR Canada would encourage investors to seek this information out and is urging regulators to mandate the provision of such information. FAIR Canada would also caution that investors should be aware that past performance does not predict the future performance of a fund.

Print