Mutual Funds Returns: Why Investors Miss Out

Why do investors miss big returns? The data shows that average investors lag behind the returns of the average fund they invest in. The data also appears to be counter intuitive, but it brings to light one of the most important aspects of mutual fund investment.

The fact is that investors tend to get into funds after they’ve already shown big returns, making it less likely for those returns to be repeated after the investor gets in on the action. This experience highlights questions about whether fund returns are the best way for investors to...