Five ways in which a fund’s impressive record vs. peers may not realy indicate much:

  1. The best performance came under a portfolio manager who is no longer with the fund
  2. The fund has become too large to efficiently invest in the market segment or style that produced its best results
  3. The fund invests differently than most of the others it is being compared to, so the peer group isn’t a good fit
  4. The fund has a flexible charter and tends to bounce among categories; its numbers look good in one category but look like a laggard in another
  5. The fund changed its investment mandate partway through the time period you are looking at

Learn more about how common measures of mutual-fund performance sometimes tell you a lot less than you might think in this Wall Street Journal article from Michael A. Polluck.

Mutual-Fund Performance Numbers May Tell You Less Than You Might Think - WSJ.com

Mutual-Fund Performance Numbers May Tell You Less Than You Might Think – WSJ.comhttp://online.wsj.comSome of the most common investor tools—from numbers of stars to comparisons with benchmarks—have quirks and limitations that can render them far less helpful than people think.