Fund launches slow; caution is watchword for investors

While new mutual fund launches are lagging last year’s total, fund firms continue to introduce new products, even in the down market. Through June 30, there were 315 portfolios launched, a far cry from the 741 new funds launched year-to-date in 2008. The leading categories of new funds to date are large-cap core, with 16 new portfolios; multi-cap core, with 12; and large-cap growth, with 12. “Investors are getting back to large-cap and multi-cap,” said Tom Roseen, a senior research analyst at Lipper. “These are the traditional mainstays of a portfolio.” When investors venture back into equities or move to increase exposure, they are likely to look for investments that are relatively conservative, observers say. “Until you have a real sense that the equity markets are strong and are going to rise with some consistency, I think you will see a real conservative streak on the part of investors,” said Burt Greenwald, a Philadelphia-based mutual fund consultant. “Investors are looking for stability, fixed income and balanced funds. These are going to continue to be at the forefront.” Investors are not in any hurry to risk their capital again, said Carolyn McClanahan, founder of Life Planning Partners Inc. of Jacksonville, Fla., which has $25 million in assets under management. “Conservative is still the order of the day,” she said. “Many people believe that on a technical basis, we are going to retest some lows in the markets.” Still, some advisers think investors will chase hot funds. “Unfortunately, the average investor’s memory is short,” said Alan Schapire, president of Libra Financial Planning of Media, Pa., which has $10 million in assets under advisement. “Investors are going to start chasing the trends.”