Q2 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 Advisor Perspectives (AP) universe in each of four asset classes. This is the ninth such study; previous studies were done at the ends of Q1 of 2009, 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 Q2 of 2009 and for the 27 month period ending June 30, 2009. Performance numbers for the 27 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 27 month period, foreign equity funds in the AP universe outperformed their benchmark by a significant margin (421 basis points), delivering an average performance of -13.00%, compared to -17.21% for the EFA exchange traded fund (ETF).
Of the top 25 foreign equity funds, 19 outperformed their benchmark over this 27 month period, with four funds (AEPGX, MACSX, ANWPX and FICDX) outperforming the benchmark in seven of the nine quarters. Another ten funds beat their benchmark in six of the nine quarters.
US equity funds outperformed their benchmark (the SPY) by 39 basis points over the 27 month period and by 490 basis points in the second quarter.
Municipal bond funds and taxable bond funds beat their respective benchmarks in the second quarter of this year, but trail their benchmarks over the 27-month period.
Detailed findings of the current study are as follows:
- US Equities: For Q2 of 2009, the top 25 funds outperformed the S&P 500 by 490 basis points (20.14% versus 15.24%), with 20 of 25 funds beating the benchmark. For the 27 month period, these 25 funds outperformed the S&P 500 by 39 basis points (-15.91% versus -16.30%), with 13 of 25 funds beating the benchmark. No funds outperformed in all nine quarters or in eight of the eight quarters. Six funds (AGTHX, ABALX, JENIX, PRWCX, AIVSX, and FLPSX) outperformed the index in seven of the nine quarters. Of the 25 funds, 13 outperformed their secondary, style box-specific benchmarks for the 27 month period.
- Foreign Equities: For Q2 of 2009, 9 of the 25 funds outperformed the benchmark, and average performance across all 25 funds was 65 basis points above the benchmark (26.04% versus 25.39%). As we note above, for the 27 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 over the 27 month period, a more appropriate benchmark.
- Taxable Bonds: For Q2 of 2009, 23 of the 25 funds outperformed the Lehman/Barclay AGG benchmark, and the 25 funds on average outperformed the AGG by 755 basis points (9.20% versus 1.66%). For the 27 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 502 basis points over the 27 months (0.47% versus 5.49%)
Municipal Bond Funds: For Q2 of 2009, 16 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 138 basis points (2.80% versus 1.42%). For the 27 month period, 19 of 25 funds outperformed the benchmark, and overall the 25 funds underperformed the benchmark by 217 basis points (1.09% versus 3.26%).
