Financial Planning contributor Andrew Shilling undertook a deep dive into 20 of the highest performing funds of the last 15 years, looking at why they have outperformed and what their future outlook may be. Reaching out to top investment professionals around the country to weigh in, the article “Funds with the best 15-year returns” explores the funds, their fees, and their future potential.

Most advisors agreed that the 20 funds in the analysis all outperformed largely due to the dominance of large cap and technology over the last decade, and investors’ demand for those funds. While several advisors homed in on the high fees that came with the outperformance, Shipley made the important point that past performance doesn’t necessarily indicate strong future potential. “’Looking at past performance as the sole deciding factor is a poor recipe for identifying potential future outperformance,’ Shipley says, noting that it’s also important to discuss ‘qualitative factors like the stability of the firm and underlying investment team, structure of the portfolio, investment manager style, and what your expectations of the future might look like.’” Critically, he points out that the next ten to 15 years may not play out the same way.

If history tells us anything, it is that markets are cyclical. We know markets go through cycles that can favor different investment styles, including sectors, market cap ranges, and regions. We are already seeing some of those shifts happening in the market currently, as attention moves toward smaller cap companies. When making a decision about the future, especially with active managers, it’s important to ask yourself “are all the ingredients that made this fund successful in the past still in place today?” The question goes well beyond looking at past performance and fees, examining qualitative factors and future expectations. One of the reasons Arnerich Massena’s approach has been so successful is because it is focused on a forward-looking outlook, identifying specific criteria that we believe are strong indicators of a manager’s potential for long-term success, and we have built our research process around these key elements.

Read the full Financial Planning article at https://www.financial-planning.com/list/funds-with-the-best-15-year-returns