Archive · 17 Sep 2025
Overcoming Starting-Point Bias in Investment Portfolios
Imagine comparing investments like visiting a city.
Depending on when you start, your experience will be different.
Starting-point bias in investing means your returns look better or worse based on when you invested.
Comparing funds this way is misleading.
Rolling returns, which measure performance over many periods, fix this.
They show how a fund performs in various market conditions.
This helps investors see if a fund is consistently good and sets realistic expectations for returns.
Starting-point bias affects investment returns by skewing performance evaluations.
Comparing returns from different starting dates leads to inaccurate conclusions.
Rolling returns provide a comprehensive view of an investment's consistency.
Rolling returns mitigate the impact of luck on return outcomes.
Investors can gain insights with qualified advisors.
- Who
- Investors
- What
- Need to avoid starting-point bias when comparing investment returns.
- When
- When evaluating investment performance.
- Where
- N/A
- Why
- To make informed decisions and avoid incorrect conclusions.
- Concept
- Starting-point bias affects investment return comparisons.
- Solution
- Rolling returns help mitigate this bias.
- Benefit of Rolling Returns
- Show investment performance across different market cycles.
- Advantage
- Helps investors set realistic expectations
- Expert
- Saurabh Mittal, investment advisor