Where are the fund shareholders' yachts?

Investors in mutual fund companies doing better than fund shareholders.
MAR 15, 2013
Shareholders of mutual fund companies have had a lot to cheer about so far this year — lots more, in fact, than the shareholders in the mutual funds themselves. Publicly traded shares of mutual fund companies soared more than 62% over the one-year ended May 20, more than double the S&P 500’s 31% return over that period, according to Morningstar Inc. The stocks, which include BlackRock Inc., Franklin Resources Inc., T. Rowe Price Group Inc., and WisdomTree Investments Inc., have been lifted by the surge of money coming off the sidelines and into investment products. Mutual and exchange-traded funds had more than $290 billion in net inflows during the first four months of the year, up about 50% year-over-year, according to research firm Strategic Insight. Shareholders in those mutual funds and ETFs, however, would’ve been better off investing in the fund companies as their investments haven’t come anywhere close to keeping pace. At BlackRock, which was up around 70% over the 52 weeks ended yesterday, the average equity fund had a return of 28%, according to Lipper Inc., for example. The same scenario played out across the industry. The average equity fund at Franklin Templeton Investments is up 27%, while the stock is up 59%; Invesco Ltd. is up 63%; its average equity fund is up 31%. Even Janus Capital Group Inc., which has just a 4% return year-to-date, has outperformed its average equity fund return 30% to 28%.

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