European investors prefer to place money in funds with solid single-year returns, rather than in those performing well over a longer period, according to new research, suggesting that good short-term performance could be more important for a fund's commercial success.

A report from data provider Lipper published yesterday examined the correlation between European funds' performance and sales over the 33 quarters from the beginning of 2002 to the end of March 2010. It found that funds performing in the top quartile of their peer group over one year took in more money than their rivals over 28 out of the 33 periods. For three-year performance, the relationship weakened slightly, with top quartile funds taking in the greatest net sales in 75% of periods.