Equity MFs: Chasing the top performer gives middling returns
January 24, 2021
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There’s no reason to bail out of your fund as long as it’s matching the category average An analysis of yearly returns of equity funds over the past 10 years shows that chasing performance is not worth the trouble and can leave you with sub-par returns. Often, investors eagerly look out for equity funds that topped the performance charts at the end of each year, and switch into them in the hope the winners will score an encore over the next 12 months.
Such churn may help distributors or the fund industry, but ‘follow the leader’ strategy does not work for the investor.