If a mutual fund outperforms the market in one period,evidence suggests that this fund is
A)highly likely to consistently outperform the market in subsequent periods due to its superior investment strategy.
B)likely to under-perform the market in subsequent periods to average its overall returns.
C)not likely to consistently outperform the market in subsequent periods.
D)not likely to outperform the market in any subsequent period.

Question

Quizplus · Accepted Answer

Mutual funds that outperform the market in one period may have had a good investment strategy or just got lucky. However, this does not necessarily mean that they will consistently outperform the market in subsequent periods. Most mutual funds tend to revert to the mean and underperform the market over the long term, so it is not a reliable indication of future performance.

If a Mutual Fund Outperforms the Market in One Period,evidence