This 1997 piece by Mark Carhart suggests that funds with high returns last year have higher-than-average expected returns next year, but not in years thereafter. This work has been an important add-on to the Fama and French model, showing momentum to be a key factor contributing to stock outperformance. It also shows that the investment costs of expense ratios, transaction costs, and load fees all have a direct, negative impact on performance.
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