"Top Performing Unit Trust Funds" Data, is it useful?

If you look at the information available on the internet, most blogs and sites tend to provide unit trust statistics regarding Top Performing Unit Trust Funds over 3 Years, 5 Years or 10 Years. Here are some snapshots of fund performance from eUnittrust taken as of 7 June 2022:

Top 5 Performing Funds (3 Yrs) as of 7th June 2022

Top 5 Performing Funds (5 Yrs) as of 7th June 2022

Top 5 Performing Funds (10 Yrs) as of 7th June 2022

No doubt such statistics do provide some insights to the investor in terms of which Unit Trust (UT) funds and in general able to provide the following benefits

1. Illustrate that investing into Unit Trust (albeit the right one) can be profitable over a 3, 5 or 10 years period.
2. Help investor in zooming into specific funds to research upon. This benefit is important to any investor especially when the investors wants to find out which are the best among the hundreds of funds available.
3. These statistics provide the additional boost to help UT marketplaces or UT agents in promoting funds to investors

Now there are also a set issues with these statistics especially for the more savvy UT investors. Let me try to list them down below:

• These statistics are changing consistently (daily basis). 

For example a Top 10 List of UT over 3 Years (published today) may contain list of funds that are different from a Top 10 List of UT over 3 Years (published 6 months ago). 

The reason such a scenario exist is due to the way the performance of a fund is calculated as illustrated below:

Fund A's Cumulative Returns (%) over 3 Years (as of 2 June 2022) : +66.96%

3 Years Cumulative Returns (as of 2 June 2022)

 Fund A's Cumulative Returns (%) over 3 Years (6 months ago) : +158.75%

3 Years Cumulative Returns (as of 31 Dec 2021)

What this means is that, such data on top performing funds is not a good gauge when it comes to trying to identify funds to invest into. The volatility of such data renders the fund ranking tables as a means to serve the soft benefits of Unit Trust as per written earlier.

• The data is purely a list of the best performing funds at any present moment, yet such data is most commonly utilized by parties in promoting UT funds. 

Such data can be rather misleading to the uninitiated new investor, especially when used as reference by blogs, social media or sites and to a certain extent unit trust consultants in promoting funds.

Example of Historical Performance used to promote funds on social media

This does not construe that all blogs, sites or UT consultants are intentionally misleading an investor, rather it should a mandatory responsibility for the educated party to inform the uninitiated investor when displaying such information .

In a nutshell, an unitiated investor when faced with such information should practice further due dilligence when selecting funds to invest into. In fact a simple google search could provide a potential list of tips and technique to when it comes to selecting unit trust funds. 

I would also like to add that apart from  knowing how to selecting the "best" fund, implementing the right strategy to investing is also crucial in ensuring that your reap the rewards in investing passively via Unit Trust. Check out also some of my older articles on unit trust investing HERE

Cheers and Happy Investing!