Superior roa performance of 3 detected almost every

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Unformatted text preview: or ROA performance of 2% : Detected 7 times out of 10. Superior ROA performance of 3% : Detected almost every time. Measurement techniques are not powerful enough to pick up “small” improvements in performance. •Kothari and Warner (Journal of Finance, 2001) Using state-of-the-art techniques, can we detect superior mutual fund performance? •100 basis points annual superior performance: Undetected. •500 basis points: Detected once every three times. •1500 basis points: Detected (almost) every time. •Ability to detect superior performance improves if one tracks a mutual fund’s stock trades....
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