The Rise and Fall of New Funds: Why Some Succeed and Others Don't

Morningstar's Quantitative Research team has identified some specific factors that help new funds succeed, as well as common pitfalls that hold them back.

In this MMI NetMeeting, Morningstar's head of quantitative research Lee Davidson and quantitative analyst Madison Sargis review their latest research on the key drivers of the success of new funds. In their presentation, they highlight what influences investor preferences when selecting new funds and what drives their risk-adjusted returns.

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Two important findings emerge: First, investors seem to gravitate toward funds that make them feel more comfortable, particularly when the interests of the fund management company are aligned with their own. Second, these investor preferences in choosing new funds have generally paid off in better outcomes.

Among the fund success factors and challenges that are discussed:

  • The ownership signal
  • The CFA difference
  • Shifting gender preferences
  • The cannibalization effect
  • Monopolistic category headwinds

Introduction: 
Arlen Oransky, SVP, Chief Membership and Programs Officer, MMI

Presenters:
Lee Davidson, Head of Quantitative Research, Morningstar
Madison Sargis, Quantitative Analyst, Morningstar

Duration: 
50 minutes (including time allocated for Q&A).