[bolu]

Well, just like the average retail investor buys last year's hot mutual fund in the hopes that (usually lucky) outperformance persists, institutional investors also got sold the "look how well my fund did last year" spiel.

But before we think to ourselves "I'd never do that - I know that past performance doesn't have predict future returns..." look at the performance of the super popular Fidelity Contrafund (FCNTX) vs the S&P over the last ten years:

60.09% FCNTX 13.58% .INX (S&P500 Index)

You know that investors every day are being sold this fund using this stat, and (the data shows) buying it.