Ch.10 · Risk Measures and Ratios · hard
What is the 'survivorship bias' in mutual fund performance data?
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EXPLANATION
Survivorship bias overstates industry average performance because underperforming funds that were merged or wound up are excluded from historical datasets. The 'graveyard' of failed funds is not visible. This makes industry performance look better than it actually is. True industry performance analysis must account for funds that no longer exist.
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