A quartile is a statistical term used to describe a division of observations into four defined intervals based upon the values of the data and how they compare to the entire dataset. Each represents 25% of the dataset. In investments, quartiles are often used to rank the performance of funds or investments
For example, a fund in the first (top) quartile has outperformed at least 75% of its peers in its category, while a fund in the fourth (bottom) quartile has underperformed most of its peers. This ranking helps investors in identifying top-performing funds and understanding relative performance.
While quartile rankings provide valuable comparative information, they should not be the sole factor in investment decisions. Factors like investment style, fees, risk profile and the fund manager’s track record should also be considered. Additionally, quartile rankings can change over time and past performance is not indicative of future results. Therefore, investors should use quartile rankings as one tool among many in their investment analysis process.
This Trustnet Learn article was written with assistance from artificial intelligence (AI). For more information, please visit our AI Statement.