Analysts and their firms have annually created lists of recommended funds for use by their advisors, and unfortunately, past performance has been a key part of the selection criteria.  But AFS research shows that even long-term performance has a 50% failure rate.

However, if you knew that successful fund performance is based on 11 fund traits that are easily identifiable, your recommended list would produce the kind of success you had always hoped it would.
After researching mutual fund cause-and-effect for over 30 years, Active Fund Strategies (AFS) found that future fund performance can be traced to a formula that considers:
1.       asset size
2.       management style
3.       manager tenure
4.       turnover
5.       expenses
6.       standard deviation
7.       beta
8.       alpha
9.       r-squared
10.    bull market performance
11.    bear market performance
A subscription to Active Fund Strategies (AFS) gives you access to a Report Card on every mutual fund and ETF, scored against its peers.  Advisors have been depending on the AFS Report Cards to hone their recommended lists since 1997.

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What We Are Working On This Month
  • Do Newly-Created Funds Outperform Their Stale and Bloated Competitors? -Over the years, many financial publications publish articles and research reports claiming that newly-created funds, free of previously poor purchases and not bloated with too much AUM, outperform their older and bloated in-category competitors.  My research has always found there is zero correlation between superior performance and funds that were new to market.
    The results delivered by the newcomers of 2016 were no different.  There were 289 actively managed equity funds that posted their first-ever annual returns in 2016.  While 22% delivered top quartile performance in their category, 30% produced bottom quartile returns.  Furthermore, 44% finished 2016 in the top half, and 56% finished in the bottom half.  A coin toss produces similar results.  These performance results refute the view that newly created funds, able to concentrate on a manager’s top few picks and without a bloated asset base, have a performance advantage.