Abstract
We looked at the relationship between the performance of predecessor and successor funds (and therefore how far predecessor performance can be used to predict successor performance), and assessed whether fund performance at four or six years can be used to predict the eventual performance of a fund. What we found is that there is a significant correlation between the performance of predecessor and successor funds, and also that you can get a good indication of a fund’s eventual performance from its performance at four and six years. This shows that investors can get meaningful information from reviewing performance of the immediate predecessor to the fund they are considering, rather than only being able to review older funds that are closer to the end of their fund lives.
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