Morningstar's John Rekenthaler reflected on a recent Wall Street Journal story, which reported that top funds rarely stay at the top for long and bad funds stay bad. He admitted this was an old phenomenon most fundsters are aware of, but, as usual, goes into more detail using Morningstar data.

What Rekentaler finds most notable is just how foreboding it is to be a fund landing in the lowest decile. These funds aren't like Rocky, getting up at the end of the fight to prove their moxie. Only one in five of those funds that have stayed in the lowest decile since 2006, as measured by Morningstar's star rating, would survive to outperform over the next five years. Tragic news, indeed. Barrons' Brendan Conway also covered the old, but sad news that PMs don't stay at the top of their game for very long, via recent the S&P Dow Jones Indices data, and manages to make the news look even worse.

Instead of looking at top performance, he looks at more average fund performance to see if funds have a fair chance of rising above average. Conway found that only 18 percent of domestic managers in the top half of performers in March 2011 were at the same place in 2013.

To read more, click here and here.  

Edited by: Casey Quinlan


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