Fund’s Past Is Important: A new study...

Fund’s Past Is Important: A new study by Prudential Diversified Investment Strategies says a mutual fund’s past performance may well signal future success or failure--despite the fact that most funds faithfully advise investors that “past performance is not an indication of future returns.” The study looked at 348 equity mutual funds over 10 years, divided them by strategy and then ranked them by performance in five-year increments. Thirty-two funds were repeat winners--top performers in both periods; 32 were repeat losers. Middle-of-the-road performance also tended to repeat, the study says. The winners’ secret and the losers’ downfall? Fees and expenses, according to PDI. “Repeating losers have expenses that are, on average, more than double those of repeating winners,” according to the study.