SURVIVORSHIP BIAS

U might have surely cme across some advertisement or salesman stating the XYZ MUTUAL FUND is BEST as it is consistenly outperforming the SENSEX and sure to give a high NAV....

A Simple study of existing mutual funds will find that mutual funs,on average, outperform there benchmarks..

But the problem in such Claims is SURVIVORSHIP....

In reality, only well performing funds continue to survive,while the underperformers die..Thus, the sample of existing mutual funs will not contain funds that underperformed and died...If all funds, dead and alive , are included in the sample than the funds, on average, do not outperform there benchmarks. The sample of existing mutual funds has as SURVIVORSHIP BIAS and will result in an overestimation of fund performance...


SO BE WARY of such claims.. and invest Ur money WISELY...