Skill vs luck - how many winners do you need?

Richard Skelt | Fidelity Worldwide Investment | 17 July 2013

Suppose I am a holder of an investment fund that over the last 36 months has outperformed its benchmark or performance hurdle by 2% per year. This performance could have been generated by either a broad spread of positions generating on average a 2% return or, alternatively, the return could have come from a small number of positions that have paid off "big time". Imagine that this fund has 30 positions. At one extreme, each of the 30 positions might have generated an excess retu...