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The Fallacy of Persistency
(Of Superior Mutual Fund Performance)
Note the lack of persistency of superior
performance of "top funds" from one period in
subsequent periods and the clear superiority of the Index
(S&P 500) over the longer periods.
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Table
6-1.
Subsequent Performance of Top Peforming Funds, 1970-1998
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Return 1970-1974 |
Return 1975-1998 |
| Top 30 funds 1970-1974 |
0.78% |
16.05% |
| All funds |
-6.12% |
16.38% |
| S&P 500 |
-2.35% |
17.04% |
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Return 1975-1979 |
Return 1980-1998 |
| Top 30 funds 1975-1979 |
35.70% |
15.78% |
| All funds |
20.44% |
15.28% |
| S&P 500 |
14.76% |
17.67% |
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Return 1980-1984 |
Return 1985-1998 |
| Top 30 funds 1980-1984 |
22.51% |
16.01% |
| All funds |
14.83% |
15.59% |
| S&P 500 |
14.76% |
18.76% |
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Return 1985-1989 |
Return 1990-1998 |
| Top 30 funds 1985-1989 |
22.08% |
16.24% |
| All funds |
16.40% |
15.28% |
| S&P 500 |
20.41% |
17.81% |
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Return 1990-1994 |
1995-1998 |
| Top 30 funds 1990-1994 |
18.94% |
21.28% |
| All funds |
9.39% |
24.60% |
| S&P 500 |
8.69% |
32.18% |
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| Source: DFA/Micropal/Standard
and Poor's. |
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| FROM William Bernstein's
The Intelligent Asset Allocator, Page 88. |
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