POSTED BY December 23, 2010 6:43 pm COMMENTS (3)ON
What exactly is the utility of short-term / long-term 1-year/2-year/5-year performances?
“This fund has given a CAGR of 25% over the last 5 years”.
This means that if you had put x amount of money in that fund EXACTLY 5 years ago (not a day more not a day less), did not add anything, did not withdraw anything from the fund, then today the value of your money has increased to 3.05x (25% CAGR).
But is this practical?
Then there is the caveat “Past performances do not indicate future returns”. So that 25% is not very important. Right.
Then we try to be a fund collector too!! Diversify into multiple funds!
Very confusing. Yours comments please.