Ch.11 · Comparing Fund Performance · medium
Why might a fund with a higher 1-year return be a worse choice than one with a lower 1-year return during peer comparison?
0% of students got this wrong
EXPLANATION
Short-term (1-year) returns can be misleading due to market timing effects — a fund may have performed well simply because it held a sector that happened to rally. Multi-year returns, rolling returns, and consistency across market cycles are far more reliable indicators of manager skill.
Practising Chapter 11 one question at a time?
Try the full chapter — 60 questions, tracked score, weak area breakdown.