Answer: Both survivorship and selection bias

## Explanation This scenario creates **both survivorship bias and selection bias**: ### Survivorship Bias - The report only includes **existing** funds that have survived - Poorly performing funds that were closed or merged are excluded - This inflates the average performance because only successful funds remain ### Selection Bias - Funds are selected based on **popularity** rather than random sampling - Popular funds may have characteristics that differ from the broader universe - This introduces bias in the sample selection process ### Why Not Instant-History Bias? - Instant-history bias typically occurs when backtested data includes only funds that survived to the present - While related, the primary biases here are survivorship (excluding failed funds) and selection (choosing based on popularity) ### Impact - The reported average performance will be **overstated** compared to the true performance of all funds - Investors may be misled into thinking fund performance is better than it actually is - This is a common issue in mutual fund performance reporting

Author: LeetQuiz .