An article from MarketWatch points out that thanks to the financial crisis of late 2008, five-year annualized returns of mutual funds are about to roughly double, even if incremental returns through the end of 2013 are nil:

MarketWatch - What a Difference a Few Months Make

This will undoubtedly lead to a marketing promotion from fund companies and advisers touting the five-year “performance” of funds in absolute terms. Moreover, absent a major downturn, numbers will look even better in about six months from now, when the trailing five-year period starts at the market’s bottom in early 2009 (re: S&P 500®’s close at 676.53 on March 9 that year).

Investors focusing solely on fund returns in isolation of relevant benchmarks make a classic mistake. Luckily, Alpholio™ can help: not only does it provide a custom benchmark for each analyzed fund, but it also makes this reference portfolio dynamic, truly adjusting for an ever-changing risk taken on by the fund over the analysis period. Therefore, from Alpholio™’s perspective, the passage of fifth anniversary of the onset of the financial crisis is irrelevant.

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