Can an investor identify superior fund managers by reviewing historical fund performance?

A successful investment manager’s track record may hide an unexpected risk element. However, sophisticated statistical techniques may be used to look through the record to illuminate the likely range of future results that the manager may experience. The article also describes the deleterious effects of variance [1] on long-term portfolio [2] growth, and introduces methods for reducing portfolio variance.

Download Buying Track Record [3].

This article originally appeared SCLC [4]’s own Investment Quarterly for the second quarter of 1998 [5].