BacktestFolio · Glossary
Survivorship Bias
In plain language
Analysing active funds over the last 20 years? You are only seeing the ones that still exist today. Those closed because they performed poorly have disappeared from the data. This makes history appear more positive than it actually was.
Technical definition
Distortion in historical data caused by the absence of instruments (ETFs, funds, stocks) that were liquidated, merged or went bust over time. Available series show only the 'survivors', tending to overstate historical returns and understate risks.