Thursday, March 30, 2006
Hidden Bias in Morningstar Data
I came across this article today and it was quite the interesting read. Apparently, this company has come to analysis that Morningstar has overstated the actual returns of the majority of the investment categories that it follows by excluding weaker funds which therefore, will inflate fund returns.
You can read the entire article here:
http://www.zeroalphagroup.com/news/Survivor_Bias_and_Improper_Measurement.pdf
The study period looked at Morningstar Principia Mutual Fund data for the 10-year period from January 1, 1995 to December 31, 2004. ...purging of the weakest funds from the Morningstar database boosted apparent returns on average by 1.6 percent per year from 1995-2004.
You can read the entire article here:
http://www.zeroalphagroup.com
The study period looked at Morningstar Principia Mutual Fund data for the 10-year period from January 1, 1995 to December 31, 2004. ...purging of the weakest funds from the Morningstar database boosted apparent returns on average by 1.6 percent per year from 1995-2004.
Disclamier:
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