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University research says performance data is valuable

The FSA&#39s decision to exclude past performance data from its investment league tables has been undermined by independent research it commissioned which claims such information should be displayed.

In a report published this week by professor David Blake of Birbeck College, University of London and professor Allan Timmerman of the University of California, the claim that past performance information should be excluded as investors may misuse it has been rejected.

The professors were asked to analyse the research prepared by Charles River Associates for the FSA last year about the use of past performance. The latest report calls on the FSA to recognise the value of past performance in its league tables.

The research says: “There is a good case for the FSA publishing risk-adjusted past performance data in the comparative tables…because poorly managed funds can be exposed more quickly.”

FSA spokesman Rob McIvor says: “If there is a standardised measure which would not mislead consumers we would consider it but this report does not change our thinking.”

Henderson Global Invest-ors head of UK retail Simon Ellis says: “The fact that this report has said the FSA is wrong is very important because it is quite clear the regulator will now have to amend its app-roach and allow past performance to be included in comparative information tables.”

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