Our results are good, but we're always aiming to improve.
We track every Fund Analyst Pick and Pan that we've made since we started in 1999. We track a batting average that shows what percentage of funds beat their peer group's average during their tenure on our lists. Here are some of the lessons we've culled from our latest review.
The good news: When we're right, we're really right, and when we're wrong, we're not horrible. The batting average is an aggregated pass/fail grade over time. It doesn't consider the margin of victory or defeat. But the scale of our winning picks' performance is nearly 2.5 times the scale of the losers' underperformance. T. Rowe Price Media & Telecommunications
The opposite is true with our pans. Losers outnumber winners two to one, and the scale of their losses is nearly double the winners' gains. Nearly all of the pans are so far behind their peers that a recovery appears impossible. And the successful pans tend to be funds with narrow purviews, often using leverage, that just happen to have been on the right side of recent market trends. We don't think that they have staying power. A changing market environment could quickly wipe out their gains. For example, Rydex Inverse Dow 2X
Strongest and Weakest Asset Classes
Our picks have done well across all asset groups with 76% succeeding overall, but our U.S. stock picks haven't distinguished themselves lately, with just 56% of them succeeding over the past five years.