12 Shocking Mutual Fund Statistics
Enter the realm of the strange but true.
Think you know everything about mutual funds? "Then I have something to tell you which may shock and discredit you." (Lionel Hutz, The Simpsons) ... Or at least make you say "hmmm."
1. Bruce Berkowitz at Fairholme (FAIRX) and Fairholme Focused Income (FOCIX) has 140 times more money invested in his funds than Harry Lange has in Fidelity Magellan (FMAGX). We know this because Magellan's latest filing showed Lange with between $500,000 and $1 million in his fund. Meanwhile, the management company overseeing the funds has $148 million in his two funds. While it has two employees, Berkowitz had been the sole employee when the funds listed $139 million invested in them.
2. Fully 75% of the balanced funds with star ratings of 1 star in 2005 were wiped off the face of the earth in the ensuing five years. Now that's attrition. We found that 1-star funds were much more likely to be killed off than higher-rated funds. Why? Poor performance and resultant poor flows mean a fund isn't likely to be a money winner for the fund company. On the one hand, it's bad for fund investors that these records get swept under the rug. On the other, investors in bad funds are probably better off getting their money back or having their fund merged into another.
3. Large-growth funds have seen $113 billion in net outflows since 2001. This year is already the worst year for large-growth flows, with $29 billion in net outflows. Mind you, the category received $170 billion in net inflows in just 1999 and 2000 combined. Needless to say, it's been a brutal 10 years for large growth.
4. Money market funds are paying almost nothing but are getting inflows. The last time short-term rates approached zero, December 2008, money flew out of money markets. This time around, it's flying in. While the yields may be similar, there is one big difference. The other time, people were worried about big funds breaking the buck. This time around, there's no panic.
6. There were 650 funds with Growth in their names that actually shrank over the past decade.
7. 54% of funds with the word Plus in their names have underperformed over the past five years.
8. The worst 15-year return is an annualized 8.17% loss by Apex Mid Cap Growth (BMCGX). Along the way, the fund was actually top dog in its category in 2003 (165% return) and 2008 (9% loss). If ever there were a case for why you should look beyond a single year's return, this is it.
9. The highest turnover rate is Direxion Monthly Emerging Markets Bear 2x (DXESX) with a 5,062% turnover. Leverage, shorting, and extremely short stays by shareholders make for one heck of a turnover rate.
10. There are 18 funds on pace for their 12th straight year of outperformance versus their category peers. Considering the bear markets, credit debacles, and bubbles contained in those years, that's pretty impressive. Not surprisingly, only two all-equity funds made the cut.The Elevated 18 TickerAllianz Global Investment Solutions Conservative Allocation (PALAX)Columbia LifeGoal Balanced Growth (NBIAX)Fidelity Connecticut Municipal Income (FICNX)Franklin New Jersey Tax-Free Income (FRNJX)Franklin PA Tax-Free Income (FRPAX)JP Morgan California Tax-Free Bond (JPICX)Lord Abbett Total Return (LTRYX)Manning & Napier Pro-Blend Extended Term (MNBAX)MFS Municipal High-Income (MMHYX)Oppenheimer International Bond (OIBAX)PIMCO Mortgage-Backed Securities (PTRIX)PIMCO Total Return (PTTRX)Schwab 1000 (SNXFX)T. Rowe Price Media & Telecommunications (PRMTX)Target Total Return Bond (TATBX)Thornburg International Value (TGVAX)Vanguard GNMA (VFIIX)Vanguard Ohio Long-Term Tax-Exempt (VOHIX)
11. Four funds are on pace for their 11th straight year of underperformance. So, clearly not all mistakes are swept under the rug. The Feeble Four are: Embarcadero Market Neutral (EFMNX), ING Emerging Countries (NECAX), Performance Short-Term Government Income (PFSFX), and ProFunds Bull (BLPIX). Gregg Wolper recently profiled the ING fund in a Fund Spy.
12. The money PIMCO collects on fees for PIMCO Total Return (PTTRX) ($1.14 billion) could buy 76 million yoga mats; 3,000 Rolls Royce Phantoms; 114 million Snuggies for dogs; 207 million 22-ounce Rogue Mocha Porters; 9.1 million subscriptions to Morningstar FundInvestor; 142 million 22-ounce Goose Island Sofie Ales; or bail out Lindsay Lohan 2,700 times.
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Russel Kinnel has a position in the following securities mentioned above: PTTRX. Find out about Morningstar’s editorial policies.