Survivorship Bias in Action

The Times of India has a story today that is a textbook illustration of the deceptive marketing carried out by the mutual fund houses.  Apparently, “nearly one out of every two funds has bettered the sensex returns of 9% (emphasis added).”  What, say that again?   So, if I had invested my money uniformly across all these funds, I might have nearly beaten the Sensex? Of course, after taking off the entry and exit loads, the Sensex would have certainly beaten me.  The  “CEO of a top mutual fund” (whose PR flack almost certainly provided the entire copy of the story) is quoted as saying “We (the industry) have delivered always alpha.”  Wait a minute, negative or positive alpha, Mr. CEO of a Top Mutual Fund Company.  This is hilarious, except there are probably plenty of statistically challenged people out there that would swallow it whole and continue to repose faith in this morally bankrupt “industry.”  Notice how that  there isn’t even a passing reference to funds that might have lost money over the year. Blech!