Dodge & Cox Stock(DODGX Quote) returned 15% annually in the five years through March 2004, outdoing the S&P 500 Index by more than 16 percentage points. But then the picture changed. For the five years ending this March, the fund lost 6.6% a year on average, lagging behind the benchmark by 1.8 percentage points.
Does past performance provide any guidance about future results? Investors' frustration is particularly severe these days because of the market turmoil. Funds that once ranked at the top of the standings have suddenly sunk into the cellars.
But the recent erratic showing of funds doesn't mean investors should ignore past performance. By studying performance carefully, investors can get an idea of how a fund is likely to fare in the future relative to benchmarks. ...
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