Many would say that a fund that produced returns of 22% per year for the past five years has a better manager than a fund that returned 20% per year over the same period. That's sometimes the case but not always. The fund that gained 20% may have beaten competing funds that follow the same investment style by six percentage points, while the 22% gainer may have lagged its competitors by a mile.
To really know how well a fund is doing, put a fund's returns into context. Compare the fund's returns to appropriate benchmarks—to indexes and to other funds that invest in the same types of securities.
How Risky Has It Been? >>