Good funds don't predictably stay good, and poorly performing funds often stay bad. Most in fundsters already know these facts in their guts, but for those who don't The Wall Street Journal's Joe Light has an article with some numbers.

Light does not go after any funds by name, but he does lay out the general case as shown by the latest research.

Light interviewed Russell Kinnell, director of mutual fund research at Morningstar, who eschewed looking at simply one year of performance, in case a manager's strategy is temporarily unfashionable. Instead, Kinnell is quoted as saying, investors should look at performance in the past five years.

He writes that PMs are seeing greater competition, as low cost index mutual funds like Vanguard's [profile] have become more and more popular and private equity firms got larger.

Mutual funds that have performance which ranks among the top quarter of their peers generally don't meet that performance a second time, Light writes. Light looked at the "Persistance Scorecard" released by S&P Dow Jones Indices last week, which found that of the 134 funds that fell into that category, 16 stayed in that category for the five years ended March 2013.

A good portion of the worst performers stay the worst, however, with 64 of the 134 funds in the bottom quarter remaining at the bottom.

To read more, click here. 

Edited by: Casey Quinlan


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