John Husselbee: Persisting with unicorns

Patience must be a watchword

In more than 30 years of analysing fund managers across the world, one of the most important lessons I have learned is consistency of performance is close to impossible over any decent timeframe.

Despite this, and repeated warnings about relying on past performance as a measure of future success, we continue to see a raft of studies based on consistency, showing which managers have been able to post outperformance over consecutive years. As very few can show such consistency year after year, this has been used as evidence to support a passive approach. With this is mind, I was interested to read new research form Morningstar, under the intriguing title of Quit chasing unicorns: consistent fund performance is overrated, taking aim at exactly this kind of consistency-based data,...