Though low-cost ETFs have become much more popular over the past decade, mutual funds are still a popular choice -- especially for inexperienced investors. At the end of 2012, 265 million people had invested more than $13 trillion in about 7,500 funds.
Because these funds -- which typically underperform the S&P 500 -- are popular with novice investors, there is a clever trick fund companies can play to make it appear as though their funds are performing better than they really are. Although technically true, this trick disingenuously gives investors a number that means little.
If you're looking to invest in mutual funds, and the historical performance of those funds matters to you, check out Motley Fool contributor Brian Stoffel's video on what this trick is, and how to avoid it.