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Portfolio > Mutual Funds

Hard to Keep Up Performance

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Standard & Poor’s latest mutual fund persistence scorecard, released in mid-August, found that through June 30, very few funds were able to consistently repeat top half or top quartile performance.

Over five-years ending June 30, 2006, only 58 (10.8%) large-cap funds, 12 (7.9%) mid-cap funds, and 19 (7.7%) small-cap funds maintained a top-half ranking over five consecutive 12-month periods, S&P found. A total of three large-cap funds (1.12%), zero mid-cap funds, and one small-cap fund (0.81%) maintained a top-quartile ranking over the same period.

“The low count of mutual funds that consistently maintain top quartile rankings is a sobering reminder about the risks of chasing past performance,” said Srikant Dash, Index Strategist at Standard & Poor’s, in a statement.

S&P also looked at longer time horizons, and found that only 17.5% of large-cap funds with a top quartile ranking over five years ending June 30, 2001, maintained a top quartile ranking over the next five years ending June 30, 2006. Only 6.8% of mid-cap funds and 18.7% of small-cap funds repeated their top quartile performance over the same period. Similarly, 36.3% of large cap funds, 26.4% of mid cap funds and 47.0% of small cap funds with a top half ranking over five years ending June 30, 2001, maintained a top half ranking over the next five years ending June 30, 2006, S&P found.


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