‘Do not expect the fund’s quoted past performance to continue in the future. Studies show that mutual funds that have outperformed their peers in the past generally do not outperform them in the future.  Strong past performance is often a matter of chance.’

Key components Empirical Study PDF (Key pages selected)

The Great Debate: Active Vs. Passive

Determinants of Portfolio Performance: Is it really manager skill?

Random Walk Down Wallstreet

History of Market Efficiency

Modern Portfolio Theory: Textbook Edition

We see yet again how the financial industry tries to mislead advisors and investors. Become educated and remember–you can’t always believe everything you read! Putnam Absolute Funds came out in early 2009 after the market had collapsed (along with hundreds of other mutual funds–see MF Deception). Mutual Funds success (how much they make) is directly related to their returns so the funds press for ways to be deceptive and manipulate returns. Incubator Funds, Survivorship Bias (where a poorly performing fund is merged with a good performing fund thus forever eliminating their returns from reporting), and other strategies gives the ‘illusion’ that the fund is performing well. The problem arises in a down market as to how to get investors money off of the sidelines or into new funds. Advisors ’sell’ based on PAST PERFORMANCE which has absolutely no bearing on the future. So what do you do if you are a Mutual Fund, Brokerage House or Advisor??????

Sell a great new fund designed for markets like this, of course! Enter Putnam Absolute Returns……..they earn clients returns in good markets or bad with their strategies (I’m just repeating their marketing garbage–in the old days we’d call it lies but we are in a politically correct world). The next thing to do is to get Advisors (salespeople) to believe in your product and the ‘pitch’ they offer. So below you will find the incredibly inaccurate and deceitful chart in Investment News describing this new fund. The chart is amazing……too bad most investors or Advisors won’t read the fine print to realize it has nothing to do with Putnam Absolute Return Fund and is highly deceptive since they are comparing two widely different asset classes.

One day I pray Advisors and Investors wake up to the games that are played with their money and futures. One last thing, who cares about past performance? Love to hear some blog responses to this one.

Putnam Chart

The coach pounds away on the con game used by mutual fund firms and brokers to create the illusion of good performing funds. The video originally posted April 16, 2009 discussed the launch of Putnum’s Absolute Return Funds. Subsequent video’s show how Bryan was right on when he first called it.

What they DON’T tell you about mutual funds…

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So you get that big prospectus but what’s really inside of it? Learn to understand all of the fee’s and expenses that are ‘hidden’ within mutual funds.

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Brokerage firms sell mutual funds with a dizzying array of ‘alphabet letters’ and most investors have no idea what it really means.  Watch the video to learn the difference between A, B, C and other share classes.

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Bond funds or mutual funds primarily composed of bonds are sold to investors as a way to ‘diversify’ your risk when investing in bonds. The problem is that when times get tough, bond mutual fund managers must liquidate bond holdings to cover redemptions thus causing investors who are attempting to ’stay the course’ losses in their portfolio.

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American Funds is a mutual fund that is widely recommended by most brokers and firms due to their past performance of being at least ‘decent’ with their returns (when you figure in all costs).  The problem is that now American Funds holds over 880 Billion in assets and its size is making it increasingly unable to perform.  Let alone that it’s a mutual fund and they won’t beat indexes over time with all costs figured in.

http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20091101/REG/311019962&ht=american%20funds