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Rating:Which Funds Took Home the Bacon in 2004? Not Rated 4.0 Email Routing List Email & Route  Print Print
Tuesday, January 11, 2005

Which Funds Took Home the Bacon in 2004?

Reported by Theresa Sim

Investment advisors stuck to the well-traveled path in 2004, choosing to open fund types that have been popular in the past. Of the 191 funds opened in 2004, nearly one-third of the funds opened were Moderate Allocation, Large Blend or Large Growth funds. Large Value, Small Growth and Mid-Cap Growth were also popular launches, according to Financial Research Corp. data.
Bright Ideas?
New Funds by Morningstar Category Number
Moderate Allocation 25
Large Blend 21
Large Growth 15
Large Value 12
Small Growth 10
Mid-Cap Growth 9
Small Value 8
Conservative Allocation 8
Specialty-Natural Res 7
Bear-Market 7
Source: FRC data

Moderate Allocation funds may have been the most popular fund opened in 2004, but overall, advisors have decreased the fund openings in this category. In 2004, Moderate Allocation funds opened dropped from a five-year high of 31 in 2003. In the past, advisors favored the fund category, upping the number of funds opened from 15 in 1999 to 25 to 2002.

Advisors similarly slowed openings of runners-up Large Blend and Large Growth fund openings in 2004 compared to 2003, mirroring the overall slowdown in fund openings. The number of Large Blend and Large Growth funds opened both peaked in 2000, with advisors opening 54 and 64 that year, respectively.

Still Number One
Moderate Allocation Fund Openings, 1999-2005 Number
Moderate Allocation - 1999 15
Moderate Allocation - 2000 18
Moderate Allocation - 2001 15
Moderate Allocation - 2002 25
Moderate Allocation - 2003 31
Moderate Allocation - 2004 25
Source: FRC data

Although advisors may have put many of their fund eggs in a few Morningstar baskets, the move did not guarantee success for the advisors. Among the six top asset-gathering funds, four were large blend, large value or moderate allocation funds, but funds in two unpopular categories also found their way in the top six. A bank loan fund, MainStay's Floating Rate A and a high yield bond fund, Potomac's Dynamic High Yield Bond fund, pulled in a fair share of daily average inflows, averaging $1.1 million and $1.3 million for every day they were open.

Bank loan funds and high yield bond funds, however, were not popular funds to open. Advisors opened three bank loan funds in 2004 and six high yield bond funds.

Blending Favorably
Large Blend Fund Openings, 1999-2005 Number
Large Blend - 1999 52
Large Blend - 2000 54
Large Blend - 2001 33
Large Blend - 2002 29
Large Blend - 2003 35
Large Blend - 2004 21
Source: FRC data

The top asset-gathering fund, the GMO US Quality Equity IV Fund, gained an average of $2.2 million daily, according to FRC data. The large value fund was also tops among its 2004 peers in total assets: it amassed $719.7 million in the 329 days that it was open.

Large blend fund ING's Stock Index I pulled in $1.4 million daily on average. The fund, which opened on May 3, had a total of $348.2 million in assets at the end of October.

The Sweet Seven
Top 7 Fund Launches of 2004, by Avg Inflow Net Assets ($ mil) / Days Opened
GMO US Quality Equity IV 2.2
MassMutual Inst Div Val S 2.1
ING Stock Indx I 1.4
Potomac Dynamic HY BondIv 1.3
MainStay Floating Rate A 1.1
Wasatch Heritage Growth 0.7
Vanguard Value VIPERs 0.6
Source: FRC data
Notes: Asset data for some funds was not available.

Now, for the toads of 2004: advisors continued to stay far, far away from technology-sector funds, opening three in 2004 (up one from 2003), fully 41 funds shy of a high in 2000; advisors also reversed course on conservative allocation funds, opening just eight in 2004 compared to 27 in 2003 and 11 in 2002.

Vanguard may have been tops in number of funds opened, but the fund firm counted five of its newborns in the lowest decile of average daily assets gathered.

Better luck this year…

Note: Fund rankings by assets gathered excluded funds lacking data.


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