has given a sneak peak into the winners and losers of its "investors returns" measure of fund performance. The MFWire
first reported on the fund tracker's planned asset-weighted measure in May (see "Phillips Hints at Morningstar's Next Numbers
", 5/25/2006"). The new measure is a response to the ups and downs of the market over the past decade and the finding that many fund investors jump on board after a run-up and too late to gain from the rise. Early reports suggest the biggest fund families may benefit from the measure.
The Vanguard Group, Capital Research & Management's American Funds, Fidelity Investments, Dodge & Cox and Franklin Templeton Investments are all fund firms with products that have high investor returns, reports the Wall Street Journal
. Pulling up the rear of the list are Janus, MFS Funds and AIM Investment Funds.
The difference between the traditional time-weighted return and the asset-weighted return can be a large one, the paper found. Morningstar used the MFS Capital Opportunities Fund as an example of the potenital difference in the two measures. The fund posted a 6 percent return for the decade ending in May. On an asset-weighted basis, though, the fund's return became -3.2 percent -- a 920 basis point swing.
In another case, the Janus Overseas Fund saw its 12.8 percent average annual return sliced to just 5 percent by Morningstar's reckoning.
Across all Janus funds the average asset-weighted return trailed the traditional time-weighted measure by 560 basis points (2.3 percent to 7.9 percent annual returns over the past decade).
In contrast, Morningstar found that investors in the four Dodge & Cox funds realized all but three basis points of the returns earned by the funds over the past decade.
Don Phillips, a managing director at Morningstar, said that the measure is based on monthly returns and is still being fine tuned.
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