A fund's published return is a time-weighted return: what £1 held from start to finish earned. Its investor return is money-weighted: it counts how much money was in the fund at each moment, so money that arrives after a strong run and leaves after a fall pulls it below the fund's own figure. The difference is called the behaviour gap, and timing — when money goes in and out — is what creates it.
How big it is, is disputed. Morningstar's 2025 study put US fund investors at 7.0% a year over the ten years to 2024, against 8.2% for the funds themselves: a gap of about 1.2 percentage points a year. A 2026 paper in the Financial Analysts Journal, working from the same kind of data with different method choices, estimated that poor timing costs fund investors about 0.10% a year. Both agree the two returns measure different things; they disagree about how much of the gap is behaviour and how much is arithmetic. The app doesn't calculate either return for your own portfolio.
US funds, ten years to 2024. A different method finds a timing cost of about 0.10% a year.
SOURCES
- Morningstar (2025). Mind the Gap 2025: US fund investor returns for the ten years to 31 December 2024.
- Fulkerson, J. A., Jordan, B. D., Riley, T. B. & Yan, Q. (2026). Bad timing does not cost investors 15% of their funds' returns: an examination of Morningstar's "Mind the Gap" study. Financial Analysts Journal, 82(3).
Educational content only. It is not personal financial advice.