Investment Performance

We all know that past performance is not necessarily a guide to the future.

Ensure you have read our sections on ‘Investment approach’ and ‘Why Invest’.

Many advisers and marketing newspapers look at investment performance in the wrong way. We all know if you ask a stupid question you will get an answer of a similar standard.

Don’t measure past performance on the basis of how well something has done over a set period of time such as 1 or 5 years. The best performer as shown in the table below was the close Beacon Investment. In the following years it was placed 1106,1324,61, 795 and 1770. The other ‘top’ five funds as described at that point are all of a similar performance standard over the coming years.

The truth is they never were ‘top’ funds. (Click on the table to view a larger image.)

Look at Invesco Perpetual European growth to see what happens when you pick today’s ‘top’ funds: (click on the graph to view a larger image)

The simple reason for this is that, in order for a fund to be top over 1,3 and 5-year periods, it must have had a spike in its performance in recent history i.e. within the last 6 – 12 months.

Typically, if a fund has had a spike in its performance, there is only one way from there, and that is a re-correction of its performance. The top-performing fund assessed by cumulative performance data changes like the weather, as a fund consistently spikes and corrects.

Read our section on ‘Investment Approach’ to understand how to maximise your ability to pick the best funds

Find out why so many people choose Worldwide Financial Planning as their Investment adviser by calling 0800 0112825 or complete the enquiry form in confidence.

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The value of shares and investments can go down as well as up