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Have some brains. Don't feed the IG zombie funds either ! |
When IG "double-taps" their zombie funds, rolling them up into similar viable funds, it creates a survivor bias in the returns - the performance of the zombies is deep-sixed forever while that of the continuing fund lives on.
What is the impact of this? A Zero Alpha Group news release stated it simply as this:
According to the Savant Capital/ZAG study, when the little-understood “survivor bias” factor is taken into account, actively managed mutual funds in all nine of the Morningstar Principia “style boxes” lagged their related indexes for the 10-year period. In all but one of the 42 narrower Morningstar fund categories, the survivor bias effect worked to inflate fund returns. The Savant Capital/ZAG analysis also shows that the purging of the weakest funds from the Morningstar database boosted apparent returns on average by 1.6 percent per year from 1995-2004.
