Here are the dismal statistics: The SouthernSun Small Cap fund has actually lost money for investors over the 12 months through Thursday. It was down 3.2 percent, according to Morningstar, and for the nine months through December, it was in the bottom quartile of funds in the S.&P. Dow Jones study. The Hodges Small Cap fund has done better, gaining almost 6 percent through Thursday. S.&.P. Dow Jones Indices says that put it in the third quartile — or second-to-worst one — through December. While it’s mathematically possible, it is highly unlikely that either will climb to the top quartile in the next few weeks, Mr. Loggie said.
Javier Vidal-García, author of the June 2016 paper contributes to the literature on mutual fund performance by examining the relationship between short-term mutual fund results and fund size around the world.
A version of this article appears in print on March 15, 2015, on Page BU4 of the with the headline: How Many Mutual Funds Routinely Rout the Market? Zero.
Besides defining both the hedge fund and mutual fund, this paper aims to expose the answer to a deeper question: Are hedge funds REALLY different than a mutual fund, and if so, how and why....
The first types of mutual fund I will discuss are “Money Market Funds.” Money market funds seek safety of the principal by investing in high quality, short-term securities....
Roger Edelen, Richard Evans, and Gregory Kadlec, who authored the 2007 study provided evidence supporting the logic of Berk’s theory. They examined the role of trading costs as a source of diseconomies of scale for mutual funds. They studied the annual trading costs for 1,706 U.S. equity funds during the period from 1995 through 2005 and found:
His findings were both robust to various tests and statistically significant at the 5% level (and even the 1% level in most cases). The finding on diminishing returns to scale in the fund industry is consistent with both prior research and theory. Vidal-García concluded that his “study of mutual fund performance and fund size confirms the evidence that total net assets value influence fund performance.”
Mr. Loggie and his crew are continuing their regular monitoring of mutual fund performance. Right on schedule, they did another winnowing of mutual funds through the five years that ended in September — and they will do another one for the five years ending this month.
Using a large sample (more than 16,000 worldwide equity funds, from 35 countries, with the United States making up about 40% of the sample) that represents more than 90% of global market capitalization and covers the period from 1990 through 2015, he found that fund size shows a significantly negative coefficient (overall, the funds in the smallest quintile present better performance than funds in the largest one) using both net returns and Carhart four-factor alphas (beta, size, value, and momentum) as dependent variables.
But we’re now about two weeks away from the completion of another 12 months since the end of that study, and it’s been a mediocre stretch, at best, for those two mutual funds. When the month is over, to borrow from Agatha Christie, it looks as though we’ll be saying: And then there were none.
Making Money off Mutual Funds - Seeing as funds are a collection of stocks and bonds, investors tend to receive dividends on the stocks and interest on the bonds....
It included 2,862 broad, actively managed domestic stock mutual funds that were in operation for the 12 months through 2010. The S.&P. Dow Jones team winnowed the funds based on performance. It selected the 25 percent of funds with the best returns over those 12 months — and then asked how many of those funds actually remained in the top quarter in each of the four succeeding 12-month periods through March 2014.
Mutual funds process can be better understood as a form of a cycle that is below information Portfolio’s, of the taxable to tax-free, and virtually no risk money market funds and high risk options (Jacobs, 2001)....
Morningstar Ratings are based on risk-adjusted return. The Overall Morningstar Rating for a fund is derived from a weighted-average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Past performance does not guarantee future results. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating? based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.)