Even though past performance may or may not be sustained in future, it is still a primary criterion which a lot of investors consider before they select a fund for investing.
By looking at past performance with respect to the benchmark or peers we can analyse how well the fund has performed. Performance comparisons must be used only to compare the same type of funds.
Hence the performance of a mid cap fund cannot be compared to that of a large cap fund. By looking at various periods we can analyse how the fund has been managed.
This in turn gives us an idea about the capability of the fund manager and her/his team. Also we can study how the fund has performed in terms of risk adjusted returns.
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