(Opalesque) New research shows that there exists a set of quantitative indicators that can help investors determine the likely future performance of their fund managers. The study, which was conducted by Professor Andrew Clare of Cass Business School and co-authored by Mariana Clare of Imperial College, was supported by Spain’s Inversis. It uses a comprehensive data set which compares the performance of over 2,100 US mutual funds from 2000 to 2017.
The research finds clear evidence to suggest that a manager who produces a low information ratio is very likely to be among the worst, benchmark-adjusted performers in following years. Similarly, there is also evidence to suggest that managers with a high fund turnover or who experience high net fund inflows also tend to underperform their benchmarks in subsequent years.
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