New York, August 14, 2006 – Standard & Poor’s, the world’s leading provider of independent investment research, indices and ratings, released today its latest mutual fund persistence scorecard that measures the consistency of top mutual fund performers over time. Through June 30, 2006, Standard & Poor’s scorecard shows very few funds manage to consistently repeat top half or top quartile performance.

Over five-years ending June 30, 2006, only 58 (10.8% or 1 out of 9) large-cap funds, 12 (7.9%, or 1 out of 13) mid-cap funds, and 19 (7.7%, or 1 out of 13) small-cap funds maintained a top-half ranking over five consecutive 12-month periods. A total of 3 large-cap funds (1.12%, or 1 out of every 89), zero mid-cap funds and 1 small-cap fund (0.81%, or 1 out of every 123) maintained a top-quartile ranking over the same period.

“Standard & Poor’s research shows that very few funds manage to consistently repeat top half or top quartile performance,” says Srikant Dash, Index Strategist at Standard & Poor's. “The low count of mutual funds that consistently maintain top quartile rankings is a sobering reminder about the risks of chasing past performance.”

Looking at longer time horizons, only 17.5% (less than 1 out of 6) of large-cap funds with a top quartile ranking over five years ending June 30, 2001 maintained a top quartile ranking over the next five years ending June 30, 2006. Only 6.8% (less than 1 out of 14) of mid-cap funds and 18.7% (less than 1 out of 6) of small-cap funds repeated their top quartile performance over the same period. Similarly, 36.3% of large cap funds, 26.4% of mid cap funds and 47.0% of small cap funds with a top half ranking over five years ending June 30, 2001 maintained a top half ranking over the next five years ending June 30, 2006.

“Our research has found that consistent, top performing funds tend to share similar characteristics, in particular, more experienced management teams which can successfully maneuver their funds through volatile markets,” says Rosanne Pane, Mutual Fund Strategist at Standard & Poor’s. “Consistent, top performers also tend to have lower expense ratios, and minimize the expense drag on performance."
 

Survivorship
Fourth quartile funds continue to have a higher probability of disappearing. The five-year transition matrix notes that 41.9% of large-cap, 41.9% of mid-cap, and 39.2% of small-cap 4th quartile funds disappeared due to mergers or liquidations.

Standard & Poor’s Mutual Fund Performance Persistence Scorecard is the only comprehensive, periodic, and publicly available source of such data.

About Standard & Poor’s Mutual Fund Performance Persistence Scorecard
The semi-annual S&P Mutual Fund Performance Persistence Scorecard tracks consistency of top performers over three and five consecutive-year periods and measures performance consistency, corrected for survivorship bias, through transition matrices for one, three- and five-year non-overlapping holding periods.

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