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Autif research refutes FSA&#39s anti-performance position

Autif dealt another heavy blow to the FSA&#39s anti-past performance stance this week with new research revealing that performance figures can play a crucial role in fund selection.

The research, carried out by financial consultancy Charles River Associates, analysed the findings of 29 past performance studies carried out over the last three decades.

It concluded that while past performance is only a weak indicator when trying to pick top-performing funds, it is a valuable tool in eliminating poor performers.

The FSA has suggested that past performance provides no guide to future returns and has omitted performance data from its recently launched investment fund comparative tables.

But CRA directly criticises the Rhodes report – which is the basis for the FSA&#39s current stance on past performance – saying that it fails to take full account of the available research on the subject and misrepresents the findings of the work that it uses.

CRA will now carry out its own statistical analysis, to be published in a new report later this year.

Fidelity, Standard Life Investments and Skandia are all sponsors of the research, alongside Autif.

Autif director general Richard Saunders says: “This study, the most comprehensive of its kind, demonstrates conclusively that taking investment decisions without access to past performance data is unwise.

“We must conclude that the FSA&#39s decision to exclude this information from its comparative tables was a mistake which is detrimental to consumers.

“Past fund performance is never a guarantee of future performance. But in recent years, Government and regulatory policy has been driven by the assumption that there is no relation between the two. The work that we are publishing today decisively shows that view to be outside the consensus of academic research.”

The FSA declines to comment on the report.


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