Can a Mutual Fund’s Past Performance Predict its Future?
Yale SOM’s Prof. James Choi debunked a 1997 paper that suggested that the performance of a mutual fund can be predicted by its performance in the previous year.
Historically, a foundational 1997 paper has been scripture for finance experts, which suggested that a mutual fund’s performance in one year helps predict how well it will fare the following year. A new study by Prof. Choi revisited this landmark research and found that it doesn’t describe present-day markets.
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