Vanguard’s research team examined exactly this question in a July 2014 study, “Quantifying the Impact of Chasing Fund Performance.”

Vanguard notes that chasing performance isn’t limited to individuals. Most institutional investors do so as well. Unfortunately, studies on pension plan sponsors have found that the managers who were fired actually go on to outperform their replacements. Yet, despite this and other evidence demonstrating the lack of persistence in outperformance beyond the randomly expected, chasing prior returns must have a strong allure because investors keep doing it.

Read the rest of the article on CBS News.

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