'Past performance is' clearly 'no guarantee of future results' 📊

Top fund managers rarely stay on top. Market-beating managers rarely keep beating the market. 📉

Very few top performing fund managers stay on top. (Source: SPDJI)

It’s hard enough to construct and manage a stock portfolio in a way that beats the competition.

Even if you are a fund manager who generated industry-leading returns in one year, history says it’s an almost insurmountable task to stay on top consistently in subsequent years.

S&P Dow Jones Indices (SPDJI) just published their latest Persistence Scorecard, which tracks the performance of actively managed funds over the past five years through 2024. Just 4.21% of all U.S. equity funds in the top half of performance during the first year were able to remain in the top during the four subsequent years. Only 2.42% of U.S. large-cap funds remained in the top half. (See the chart above.)

No funds — literally 0.0% — remained in the top quartile of performance over the past five years.

“Skill is likely to persist, but luck is ephemeral,” SPDJI analysts wrote. “The Persistence Scorecard demonstrates that consistent outperformance, both relative to peers and versus the benchmark, is typically hard to find.“

The results aren’t much better when you take a closer look 🔎