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Should you rely on past returns for your 
mutual fund investments? 

Before choosing a mutual fund scheme, investors invariably examine the past few 
years’ returns.

Prioritising the past returns might look natural but it is not recommended by the experts.

The past three-year returns are not the correct yardstick to estimate future 3-year returns.

Also, past 3-year outperformance has no correlation with the future 3-year outperformance.

You need to consider the valuation, business growth, and diversification of the underlying portfolio. 

You need to know how different portfolios behave under different market conditions.

Investing based on past returns alone is no better than the flip of a coin. 

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Should you rely on past returns for your mutual fund investments?

A number of studies have shown that it is not recommended to rely only on the past performance of a mutual fund scheme before determining whether it is worth investing into.

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Should you rely on past returns for your mutual fund investments?

A number of studies have shown that it is not recommended to rely only on the past performance of a mutual fund scheme before determining whether it is worth investing into.

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