When advertising a new high-yield bond fund, how should a money management firm present historical returns?

The correct approach for presenting historical returns when advertising a new high-yield bond fund is to include historical returns only if the fund has been in existence. This means that the firm should not present any past returns if there is no actual historical performance data for that specific fund.

Including past performance is essential for providing potential investors with context about how the fund might perform relative to benchmarks or similar investments, but it must be based on an actual historical record. If a fund is new and has never been in operation, there would be no real historical returns to report, and any attempt to present hypothetical or future projections without that context could be misleading.

Options that suggest reporting only successful investments or stating returns without context fail to provide a complete and honest picture, which may mislead investors. Presenting historical returns for funds that do not exist is equally problematic because it would misrepresent the fund's performance and could violate ethical advertising standards in the finance industry. Therefore, clarity and transparency in stating historical data is crucial for maintaining trust and compliance with regulatory standards.