All-Star Mutual Funds?

Abstract

Since 1993, USA Today has selected 25 stock mutual funds as “all-stars.” It contends that these funds are consistent long-term performers, have seasoned managers, reasonable initial investments, and sales charges, and are open to the average investor. The implication is that fund prior performance is due to skill and should be reproducible. This study tests the 1997 “all-star” selection, finding that 10 of the 25 funds have questionable (at best) pre-selection performance. There is no convincing evidence in post-selection performance that these funds as a group outperform the overall market.