8.37Evaluating 3-, 5- and 10-year performance
1What is it?
Check that the fund has performed well across several periods and through at least one market fall.
2Why does it exist?
Good funds are consistent: rarely the top, rarely the bottom, and fall less in crashes.
3Practical use
Look for funds in the top half of their category over 3, 5 and 10 years, rather than #1 in one period.
4Quick revision
- Consistency across periods.
- Behaviour in falls matters.
- Top-half consistently > top once.
5Knowledge check
Q1. Why include a market fall in your evaluation?Show answer
To see how the fund protects capital.
Q2. Better: #1 once or top half every period?Show answer
Top half consistently.
Q3. What if a fund is only 2 years old?Show answer
Limited track record; be cautious.
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