Avoiding the Negative Return Gap

Writing in the Wall Street Journal, former Morningstar analyst John Coumarianos highlights “investors’ self-defeating behavior” and suggests ways to correct it. He notes that Morningstar data shows a “negative ‘return gap’” of 1.8% over the past decade, and 1.6% over the past 15 years, “because of bad trading.” The return gap is the difference between a fund’s total return (which accurately measures a manager’s performance) and an “investor return” (also called “a dollar-weighted return”), which… Read More