The Problem with “Chasing Performance”

Many investors tend to favor funds that have recently done well. This habit is sometimes called “chasing performance” since these investors are constantly trying to get their portfolio to catch up with the results of the top funds. But is it an effective way to invest? That depends on whether funds that have done well in the past are more likely than other funds to do well in the future. And according to a recent study by Vanguard, that’s not the case.

Topics: Blog Vanguard Performance