Persistence in Mutual Fund Returns Revisited: An Examination of Growth Mutual Funds from 1988-1996

Abstract

There has been much debate about mutual fund performance - especially about the persistence of excess returns. Prior research on persistence in performance has examined samples of mutual funds in various ways. This study examines the returns on a sample of growth equity mutual funds over the period 1988-1996. The determination of winning/losing is based on a fund outperforming/underperforming the S&P 500 as the market benchmark. The sample of mutual funds examined over the study period shows both significant positive performance as well as persistence in performance. Persistence in positive performance outweighs persistence in negative performance.