(Extracted from innovativewealth)
Fidelity Investments conducted a study on their Magellan fund from 1977-1990, during Peter Lynch’s tenure. His average annual return during this period was 29%. This is a remarkable return over the 13 year period. He was easily one of the best performing fund managers for his asset class. It should be noted that this was not a secret. Fidelity’s Magellan fund became one of the largest mutual funds due to its success under Peter Lynch, so it is clear that investors were aware of its performance. Whether the investors in the fund were chasing performance or investing due to his expertise is unclear. What is clear is that investors learned that Peter Lynch was investing in a method that worked.
Given all that, you would expect that the investors in his fund made substantial returns over that period. However, what Fidelity Investments found in their study was shocking. The average investor in the fund actually lost money.