Past performance of a fund may or may not be sustained in future due to market forces. However we all look at past performance for CONSISTENCY of a fund. The problem I sometimes face is performance of two funds may be quite different over last 1/3/5 years. In such cases for how many years the performance should be considered? I do not know how to compare perform for more than 1 year at VROL but at investmentyogi site this is possible. Now consider comparing perform of HDFC equity, HDFC Top200, Reliance Reg Saving equity over last 1, 3 and 5 years. You will see over last 1 year, in terms of return, HDFC Equity (25%)>HDFC TOP200(21%)> Reilance REg Savings equity(12%), whereas over last 5 years Reliance Reg Savings(25%)>HDFCTOP200(20.4%)>HDFC Equity(20.3%). Of course there are other factors to be considered (like expense ration but that is not much different for the funds over last 1 year), since return alone can not be sole criterion, but how do I decide how many years should the performance be tracked?
Particularly, since market crashed about 3 years ago, how should this fact affect our decision about looking at 1/5 years performance?
Particularly, since market crashed about 3 years ago, how should this fact affect our decision about looking at 1/5 years performance?
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