Why is fund performance difficult to sustain?
By:
24 September, 2024
In the long run, a large number of public funds outperform the market every year, creating a good return on investment for investors, but for a single fund, it is difficult to consistently outperform the industry. As for the underlying reasons, we have some guesses:
1. The market is highly efficient, and the short-term operation of stock prices will be quickly captured by other smart people, catching up with the funds running in the forefront, increasing the difficulty of continuing to outperform
2. The characteristics of equity height fluctuation and style rotation make any single style investment and single strategy investment unable to continue to outperform in the market, and fund managers are often only good at familiar areas and styles of investment
3. Excellent fund managers left. We counted 75 fund managers in the top 40 funds from 2010 to 2014, 32% of them worked in private equity and 19% jumped to other platforms
4. The assessment mechanism of fund managers: most public funds are assessed on the basis of relative returns, and the assessment cycle is short, which encourages fund managers to bet more on industries and market styles, exacerbating performance fluctuations
