Recency Bias · Investor Behaviour · Asset Allocation · Diversification · Financial Advice
The Tyranny of the One-Year Column
Every fund table has a column that gets all the attention and deserves the least. Recency bias is the most expensive habit in investing.
Late 2025 offered a clean experiment in investor psychology. Silver had returned more than 80 percent over one year, and demand for silver funds surged accordingly. Over the same stretch, information technology sat among the worst-performing sectors, with the leading IT index in negative territory for the year, and investors kept their distance. A generation earlier the flows ran the other way: the IT boom of the late 1990s pulled money into technology-heavy funds precisely because the recent numbers were spectacular.
Different decades, identical reflex. Money chases whatever the one-year column praises and flees whatever it condemns. The reflex has a name: recency bias, the tendency to weight recent events far more heavily than long-run evidence. It is the most natural instinct in investing, and among the most expensive.
Why the column misleads
Asset classes, fund categories and sectors move in cycles. Buying after a spectacular year usually means buying an asset at its most expensive, while ignoring the unloved asset that is assembling its comeback unnoticed has the opposite cost. A brilliant one-year number says almost nothing about the next ten. It says a great deal about what has already been priced in.
Decisions taken from the one-year column also detach a portfolio from its purpose. Retirement and a child's education are fifteen-year problems. Solving them with twelve-month information is using a stopwatch to navigate a voyage.
The one-year column reports the weather. Long-term investors are choosing a climate.
What a long record actually proves
A track record spanning twenty or twenty-five years is a different kind of evidence. It means a fund has sailed through multiple full cycles: a technology bubble, a global financial crisis, a pandemic crash, rate shocks and recoveries. Surviving all of that with sound results testifies to the four things that actually endure at an investment house: robust processes, disciplined risk policies, a stable team, and a coherent philosophy. Those four travel across every scheme a house runs. Last year's chart-topper testifies mainly to last year.
Escaping the column
The defences are structural, not motivational. Anchor the portfolio to goals, so every holding answers to a horizon rather than to a ranking. Hold an asset allocation and rebalance to it, which builds in the discipline of trimming winners and adding to laggards. Automate purchases through SIPs, taking the monthly decision away from whichever column is loudest that week. And where discipline needs reinforcement, involve a professional guide whose job is to hold the long view when the recent view is screaming.
The one-year column will always be the largest type on the page. Reading past it is a learned skill, and it is worth more than any fund selection made because of it.