What is Backfill Bias?
Backfill Bias A bias that occurs when historical data are added to a database after favorable performance has already been observed, overstating long-term performance of investment funds or strategies.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Backfill Bias” Used in Practice?
Hedge fund indices are especially prone to backfill bias, making performance comparisons with mutual funds problematic.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Backfill Bias?
A bias that occurs when historical data are added to a database after favorable performance has already been observed, overstating long-term performance of investment funds or strategies.
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