the researched truth about past performance

Past performance is, at best, an unreliable predictor of future success, yet a fund's successful past performance is exactly what most financial consultants tout in the sales process.  Our studies suggest that past performance — even successful long-term performance — has all the predictable success of a coin toss.!
 
Our president Jeff McTague began past performance research back in 1991, and we can claim that long-term returns are no better at predicting future fund success than is the return of a single year.  Because the two periods included some of the most portfolio-debilitating performances, it also provided plenty of doubt about a buy-and-hold investment strategy.  Rather, it supports the notion that a successful long-term investment strategy involves ongoing active management of the portfolio, including the buying and selling of fund holdings. 
 
We also examine the bottom performing mutual funds from one period to the next.  Ironically, poor performers go on to top performance in a succeeding period more often than the previous period’s top performers.
 
In all of our research, past performance has yet to prove itself as even a modest predictor of future fund performance.
 


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testimonials

“In terms of making a positive impact on my business, Jeff McTague’s philosophy and process is the single best presentation I have seen in my 22 years as a financial consultant.”

— JoLynn Free, First Vice President — RBC Wealth Management, Austin TX
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