Explanation

This scenario demonstrates Survivorship bias, which occurs when:

• Only successful funds continue to report performance data
• Poorly performing funds stop reporting or cease operations
• The remaining sample overstates the true performance of the asset class

Key points:

• The fund reported for 10 years but stopped after a big loss
• This creates a biased sample where only surviving (successful) funds remain in databases
• Survivorship bias leads to overestimation of historical returns in performance studies

Other options:

• Infrequent trading bias: Affects pricing of thinly traded assets
• Unsmoothing returns: Deals with autocorrelation in reported returns
• Sample selection bias: Broader term that includes survivorship bias as a specific type

The specific pattern of a fund disappearing after poor performance is classic survivorship bias.