Mutual Funds

Scorecard Dept: To keep the scorecard honest, their work incorporated three key features missing in many studies, according to Winnipeg Free Press. Since these funds tend to be the poorer performers, using only the results of survivors overestimates returns. This is not a trivial matter. Imagine report card averages if students were allowed to drop their Ds and Fs. In fact, one major study found that looking at only the surviving funds' performance overstated returns by 0.9 per cent annually and kEEPING score is how winners are separated from losers. So it's not surprising a decade ago, analysts at Standard & Poor's decided to do just that by pitting the performance of S&P indexes such as the S&P 500 against the returns of actively managed mutual funds. First, they used data that were free of survivorship bias -- the distortion that arises from excluding the returns of funds that have closed or merged. (www.immigrantscanada.com). As reported in the news.