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Recent research says to buy the funds with hot hands.
This isn't the kind of investment you should make if you are saving for long-term goals like retirement or your child's higher education. Buying the best performing fund over the past six or 12 months is for those who have extra cash to play the markets. It is speculative. Thomas J. Zwirlein and Venkateshwar K. Reddy, both associate professors of finance at the University of Colorado, found that sticking with the best-performing funds can be profitable. Then they compared the return and risk for a variety of investment strategies.