Studies of mutual fund performance
A) indicate that one should not randomly select a mutual fund.
B) indicate that historical performance is not necessarily indicative of future performance.
C) indicate that the professional management of the fund insures above market returns.
D) a and b.
E) b and c.

Question

Quizplus · Accepted Answer

Studies of mutual fund performance have shown that it is not wise to randomly select a mutual fund, as some funds consistently outperform others. However, past performance is not necessarily indicative of future results, as there may be changes in the fund's management or investment strategy that affect its performance going forward. Therefore, the correct answer is that one should not randomly select a mutual fund (A) and that historical performance is not necessarily indicative of future performance (B). The idea that professional management guarantees above-market returns (C) is not supported by the research, and is therefore incorrect.

Studies of Mutual Fund Performance