Don't Expect Fund Managers to Avoid the Herd

We’re all familiar with the following disclaimer: Past performance is not indicative of future results. It is attached to virtually every investment vehicle. And yet, how many investors take its message to heart? Unfortunately, very few. In fact, the first thing most investors scrutinize in a potential investment is past performance. Most investors are probably familiar with Morningstar ratings, where it assigns a mutual fund anywhere from one to five stars based primarily on past performance. The better the past performance, the more stars it is given.