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When reading any arbitrarily chosen mutual fund fact sheet the legally required standard disclaimer stating “past performance is not indicative of future results” usually cannot be overlooked. However, even though past performance or past data in general might not be a good indicator of future results, what factors other than past performance should investors focus on, when making their investment decisions? Future results, if anything can only be simulated by using complex mathematical models, which still make broad use of past track records (e.g. via a geometric Brownian motion model).
KeywordsMutual Fund Past Performance Sharpe Ratio Fund Flow Fund Family
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