Today’s worst funds will be tomorrow’s best, analyst says

When combing through new investment ideas, advisers would be wise not to ignore mutual funds and separate-account strategies at the bottom of the heap.
FEB 24, 2009
When combing through the wreckage for new investment ideas, financial advisers would be wise not to ignore those mutual funds and separate-account strategies at the bottom of the heap. “It may be prudent to heed the historical relationship between past and future returns,” according to Frank Nickel, director of manager selection strategy for Smith Barney in New York. Historically, mutual fund and separate-account managers whose returns have been in the top 10% or the bottom 20% of their universe over the previous three years are prone to outperform for the next three years, according to his research. The strongest returns, Mr. Nickel added, are likely to come from the managers in the bottom 20%. Financial advisers might also proceed with caution when considering a money manager whose historical performance has been in the top half of its category but not in the top 10%: These are the funds most likely to produce the weakest returns, according to Mr. Nickel’s research.

Latest News

Retirement withdrawal strategies shift as US assets hit $51.2T
Retirement withdrawal strategies shift as US assets hit $51.2T

Advisors say record balances aren't a retirement income plan and urge clients to benchmark their lives, not an index

RIA revenue tool targets fee leakage as PE growth pressure mounts
RIA revenue tool targets fee leakage as PE growth pressure mounts

Wealth enterprises are leaving revenue on the table - a new PureFacts and Ascentix partnership aims to help firms take it back.

The Stacking Strategy: How Intelligent Allocation Can Create Better Tax Outcomes
The Stacking Strategy: How Intelligent Allocation Can Create Better Tax Outcomes

What if one investment decision could create tax-saving opportunities across your entire portfolio? Chris Vizzi shares how the Stacking Strategy helps investors align tax planning, portfolio construction, and wealth preservation to maximize long-term outcomes while keeping more of what they earn.

AI could drag down RIA valuations, warns Alaris CEO Allen Darby
AI could drag down RIA valuations, warns Alaris CEO Allen Darby

Buyers spending on AI may treat less efficient sellers as overstaffed and price the cost of rightsizing into lower offers

Former Western Asset Management star bond manager fined $3 million
Former Western Asset Management star bond manager fined $3 million

Kenneth Leech pleaded guilty in June to one obstruction charge, and could face six to 12 months ⁠in ​prison.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor