Specifically, the analysts found that over 15 years, 50% of large-cap value funds have outperformed benchmarks. However, if one were to included the performance results of the dead funds, only 27% of the large-cap value fund universe has outperformed benchmarks. Similarly, 34% of large-cap growth funds outperformed benchmarks in the past 15 years, but only 18% of large-cap growth funds actually outperformed benchmarks when factoring in dead funds.
Over a shorter time frame, 62% large-cap value funds outperformed benchmarks in the last 5 years, but the number drops to 46% when accounting for dead funds. About 27% of large-cap growth funds outperformed in the past 5 years, but only 19% outperformed after including dead funds.
“To gain an accurate view of aggregate performance results, it’s necessary to account for the probability that investors might have picked a mutual fund that closed and became part of the mutual fund graveyard,” the analysts added.
For more information on mutual funds, visit our mutual funds category.
Max Chen contributed to this article.