How index funds work: why doing nothing beats most experts
Why the best funds rarely stay on top: luck and survivorship bias
Fund ads are full of winners with great ten-year records. The funds that did badly are hard to find on those lists. Where did they all go?
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The letter says that after three bad years, Rono's fund will be merged into a bigger fund of the same company. Miva's money moves over by itself, into another fund where experts pick, with the same 1% fee.
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A month later, the company puts up a new ad. It lists its funds and their great ten-year records. Rono's fund is not on the list. On paper, it is as if it never existed.
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