Summary: A recent investment survey shows that managed fund performance can fluctuate widely from year to year. Among the international share funds, no single fund from this year’s top five was in last year’s top five. Academic research has shown that there is some evidence of higher performing funds producing a higher return in the next year, but this does not persist in the following years.
Key take-out: Be careful about being overly influenced by past returns when investing in managed funds. Think carefully about whether a period of good investment performance is due to skill or just luck.