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.

testimonials

“In terms of making a positive impact on my business, Jeff McTague’s philosophy and process is the single best presentation I have seen in my 22 years as a financial consultant.”

— JoLynn Free, First Vice President — RBC Wealth Management, Austin TX
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