Over the last year or so the industry regulator, the Financial Services Authority have been investigating the use of past performance figures.
Investment and pension companies (and financial advisers) tend to use the past performance of their funds to highlight the strengths. However, as everyone knows, how well something did in the past means little for future performance.
The FSA were thinking of not allowing past performance to be used when trying to tempt investors as they believed it could be misleading. However, recent research carried out by professors highlighted that poor performance does tend to carry through from the past to the future, as does generally good performance.
The general view is therefore that past performance details could actually help investors choose. We will await the FSA's response.
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