Q1 2009 Performance among the Most Popular Mutual Funds in the Advisor Perspectives Universe
Each quarter we look at the performance of the top 25 actively managed Most Popular Mutual Funds in the AP (Advisor Perspectives) universe in each of four asset classes. This is the eighth such study; previous studies were done at the ends of Q4 of 2008, Q3 of 2008, Q2 of 2008, Q1 of 2008, Q4 of 2007, Q3 of 2007, and Q2 of 2007. This study analyzes the most popular funds as of March 31, 2007, and looks at performance during Q1 of 2009 and for the 24 month period ending March 31, 2009. Performance numbers for the 24 month period have been annualized.
The goal of this study, as with prior studies, is to determine whether these actively managed funds outperform their appropriate benchmarks. Our results so far show that advisors have selected funds which deliver alpha (by outperforming their benchmark) within the foreign equity and municipal bond categories.
Over the 24 month period, foreign equity funds in the AP universe outperformed their benchmarks by a significant margin (408 basis points), delivering an average performance of -23.71%, compared to -27.79% for their benchmark, the EFA exchange traded fund (ETF).
Of the top 25 foreign equity funds, 18 outperformed their benchmark over this 24 month period, with four funds (ANWPX, FICDX, AEGPX, and MACSX) outperforming the benchmark in seven of the eight quarters. Another four funds beat their benchmark in six of the eight quarters.
US equity funds, municipal bond funds, and taxable bond funds all beat their respective benchmarks in the first quarter of this year, but trail their benchmarks over the 24-month period.
Detailed findings of the current study are as follows:
- US Equities: For Q1 of 2009, the top 25 funds outperformed the S&P 500 by 108 basis points (-9.95% versus -11.03%), with 16 of 25 funds beating the benchmark. For the 24 month period, these 25 funds underperformed the S&P 500 by 99 basis points (-24.75% versus -23.74%), with 12 of 25 funds beating the benchmark. No funds outperformed in all eight quarters, or in seven of the eight quarters. Only the Balanced Fund (ABALX) outperformed the index in six of the eight quarters. Of the 25 funds, 12 outperformed their secondary, style box-specific benchmarks for the 24 month period.
- Foreign Equities: For Q1 of 2009, 18 of the 25 funds outperformed the benchmark, and average performance across all 25 funds was 405 basis points above the benchmark (-9.95% versus -14.00%). As we note above, for the 24 month period, foreign equities consistently outperformed their benchmark, the EFA. Three of the 25 funds (FEMKX, SSEMX, and HLEMX) are emerging market funds, and these funds underperformed the EEM exchange traded fund, a more appropriate benchmark.
- Taxable Bonds: For Q1 of 2009, 22 of the 25 funds outperformed the Lehman/Barclay AGG benchmark, and the 25 funds on average outperformed the AGG by 154 basis points (1.22% versus -0.31%). For the 24 month period, performance across the 25 funds has been disappointing, with only 5 of 25 funds outperforming the AGG. The 25 funds underperformed the AGG by 890 basis points over the 24 months (-3.57% versus 5.33%)
- Municipal Bond Funds: For Q1 of 2009, 11 of the 25 municipal bond funds outperformed the Lehman/Barclay muni bond exchange traded fund TFI (we began using this ETF as the benchmark on 1/1/08). The 25 funds outperformed the TFI by 36 basis points (3.82% versus 3.46%). For the 24 month period, 9 of 25 funds outperformed the benchmark, and overall the 25 funds underperformed the benchmark by 301 basis points (-0.06% versus 2.95%).
The results for Q1 of 2009 are summarized below:
|
Average Return |
Benchmark Return |
Benchmark |
% of Funds Outperforming Benchmark |
US Equities |
-9.95% |
-11.03% |
SPY |
64% |
Foreign Equities |
-9.95% |
-14.00% |
EFA |
72% |
Taxable Bonds |
1.22% |
-0.31% |
AGG |
88% |
Muni Bonds |
3.82% |
3.46% |
TFI |
44% |
The results for the prior 24 months (annualized) are summarized below:
|
Average Return |
Benchmark Return |
Benchmark |
% of Funds Outperforming Benchmark |
US Equities |
-24.75% |
-23.74% |
SPY |
48% |
Foreign Equities |
-23.71% |
-27.79% |
EFA |
72% |
Taxable Bonds |
-3.57% |
5.33% |
AGG |
20% |
Muni Bonds |
-0.06% |
2.95% |
TFI |
36% |
Background and Methodology
The Advisor Perspectives universe tracks the investments of high- and ultra-high net worth investors whose assets are managed by Registered Investment Advisors. The size of the universe is approximately $50 billion and the average account size is approximately $900,000. However, 94% of the assets are concentrated in a group of accounts with an average account size of approximately $4 million, so data from the universe is biased by this demographic, and therefore represents the investment decisions of ultra-high net worth investors.
The most popular mutual funds are determined based on the AUM (assets under management) for each fund within the Advisor Perspectives universe. The inception of the Advisor Perspectives service was in Q1 of 2007. The first complete calendar quarter of data was Q2 of 2007.
The funds used in this study were the most popular funds as of March 31, 2007. Only actively managed funds were considered; index funds, enhanced index funds, and ETFs were not included in this study.
To calculate the AUM of each fund, assets are consolidated across all share classes held in the Advisor Perspectives universe. For this study, performance data was obtained for the share class most appropriate for advisors (either a load-waived share class or an institutional share class).
Performance data and style-box classifications were obtained from Morningstar.
Detailed data is presented in the four tables in the PDF file.
Mary Pitek, Operations Manager for Advisor Perspectives, contributed to this report.
