The potential for confusion comes as insurance and fund management companies vie for money from the public. In doing so, they produce figures to show that their funds are among the top performers over various time periods.
Performance awards, such as those handed out last week by Micropal, the statistical research company, allow companies to claim that their investment skills are recognised by their peers. Adverts highlighting the companies' various award winners are then plastered over bus shelters, underground stations and the national press.
In some cases, they trumpet their performance over a short period, such as one year, ignoring previous years' poor results. In others, they use longer periods, such as five or 10 years. But this also carries risks. It may mask an erratic performance of a fund year-on-year. Some savers might even have suffered losses if they invested their money at the wrong point in a 10-year cycle.
Alternatively, the number of funds in a particular investment sector may be too small to judge performance rankings properly. Micropal's figures illustrate the problem.
Merchant Investors Assurance can boast that it beat 17 other companies in the pension fund currency sector to win first place over one year. It came third over five years. But the number of similar funds in that period was six. MI was second over 10 years - out of three funds in existence throughout that time.
Exeter Fund Managers came top in two separate unit trust sectors. But the sectors have not been in existence long enough to determine performance over 10 or even five years.
L&C Unit Trust Managers, a small company, was second out of 107 funds over one year in the UK equity income sector. Over five years, its record is far more spotty: the same fund was in 87th place out of 92. Over 10 years, the same fund came 42nd out of 52.
Another example comes from Micropal's list of the top managed personal pension funds, assuming regular premium payments of pounds 50 a month. In the five years to the end of January 1994, the top fund managers are Century Life, followed by Aegon Life, Skandia, General Portfolio and Scottish Provident.
Yet the 10-year performance figures to January this year place Colonial Mutual in the top slot, followed by Reliance British Life, Commercial Union and Sun Life.
Over 15 years, the picture changes again. This time, pole position goes to Target Life, followed by Albany Life, Confederation Life, London & Manchester, Allied Dunbar and Hill Samuel.
A Micropal spokesman said: 'Companies will show a particular time point to best illustrate their fund. It is important to look at all types of statistics available.
'They need to be over longer periods and also year by year. The most important thing is consistency. The other thing is that it is all very well to have performance, but it also necessary to look at risk.' Micropal has introduced a new risk indicator that tracks companies month by month. If there is wide variation between the monthly figures, it may indicate that greater risks are being taken with the fund's investments.
Nick Bamford, pensions director at the Surrey-based Weybourne Financial Services, said: 'The thing to do is to look at a product provider over a different range of periods, both long and short. If the company's name appears regularly among the top performers, that is one guide to how good it may be.'
He added: 'The other thing is not to assume that a company must be within the top 10 all the time. If out of 200 funds, it is in the top quartile, that is good enough.
'It is also important to compare like with like. A fund with pounds 500m in it will find it difficult to perform as well as one with just pounds 5m in it, which is far more volatile. Equally, the larger fund is likely to be safer.'
Finally, Mr Bamford advises asking about a company's fund manager.
He said: 'It is not much use knowing that a fund has had brilliant performances over the past 15 years if its manager left to join another company last week.'Reuse content