Why do some ‘good’ funds attract so little money?

aroominyork

eskbanker said:

aroominyork said:

I don't understand your point, eskbanker. Quartile info is only visible retrospectively - so?

In the same way that nobody knows how the fund will perform in the future, nobody knows at the time of investing which quartile it'll be in going forward, i.e. it's a lagging indicator.  You seemed surprised that it's not more popular given that it's in the top quartile, but only know that with hindsight - the fact that it's been in the top quartile for a number of years is obviously no guarantee that it'll stay there.

Are you saying your investment choices are not influenced by past performance?

If a fund invests in mainstream large caps, is well balanced on growth/value, and with the same manager has consistently outperformed the market/been in the first quartile over ten years, I would expect it to attract investors. Saying "that doesn't mean it will continue to do well" does not explain why it attracts so little money.

bostonerimus

aroominyork said:

eskbanker said:

aroominyork said:

I don't understand your point, eskbanker. Quartile info is only visible retrospectively - so?

In the same way that nobody knows how the fund will perform in the future, nobody knows at the time of investing which quartile it'll be in going forward, i.e. it's a lagging indicator.  You seemed surprised that it's not more popular given that it's in the top quartile, but only know that with hindsight - the fact that it's been in the top quartile for a number of years is obviously no guarantee that it'll stay there.

Are you saying your investment choices are not influenced by past performance?

If a fund invests in mainstream large caps, is well balanced on growth/value, and with the same manager has consistently outperformed the market/been in the first quartile over ten years, I would expect it to attract investors. Saying "that doesn't mean it will continue to do well" does not explain why it attracts so little money.

Poor marketing might be a factor...for me the single sector and high fees would filter it out immediately.

csgohan4

bostonerimus said:

aroominyork said:

eskbanker said:

aroominyork said:

I don't understand your point, eskbanker. Quartile info is only visible retrospectively - so?

In the same way that nobody knows how the fund will perform in the future, nobody knows at the time of investing which quartile it'll be in going forward, i.e. it's a lagging indicator.  You seemed surprised that it's not more popular given that it's in the top quartile, but only know that with hindsight - the fact that it's been in the top quartile for a number of years is obviously no guarantee that it'll stay there.

Are you saying your investment choices are not influenced by past performance?

If a fund invests in mainstream large caps, is well balanced on growth/value, and with the same manager has consistently outperformed the market/been in the first quartile over ten years, I would expect it to attract investors. Saying "that doesn't mean it will continue to do well" does not explain why it attracts so little money.

Poor marketing might be a factor...for me the single sector and high fees would filter it out immediately.

I would agree, I usually discount funds >1% immediately, and they have to be exceptional for me to consider anything above 0.75%

eskbanker

aroominyork said:

eskbanker said:

aroominyork said:

I don't understand your point, eskbanker. Quartile info is only visible retrospectively - so?

In the same way that nobody knows how the fund will perform in the future, nobody knows at the time of investing which quartile it'll be in going forward, i.e. it's a lagging indicator.  You seemed surprised that it's not more popular given that it's in the top quartile, but only know that with hindsight - the fact that it's been in the top quartile for a number of years is obviously no guarantee that it'll stay there.

Are you saying your investment choices are not influenced by past performance?

If a fund invests in mainstream large caps, is well balanced on growth/value, and with the same manager has consistently outperformed the market/been in the first quartile over ten years, I would expect it to attract investors. Saying "that doesn't mean it will continue to do well" does not explain why it attracts so little money.

No, I'm not saying that past performance isn't an influence but was just emphasising that there are others, in the context of you only (or at least primarily) citing top quartile past performance in your OP, whereas your more rounded assessment in this latest post is a more reasonable approach! 

The other point I was making was competition, in that your quartile figures were from a population of 59-75, so presumably at least some of the numerous alternative funds in that focused single sector space may have more appeal to investors?

masonic

Presumably the reason why investment firms are willing to sell their souls to the likes of HL for a place on their marketing list is that punters on the whole aren't very analytical when selecting funds - they'll often go where they are pushed, leaving other perfectly good alternatives unexplored. I've seen it commented in various threads over the years that people are reluctant to select a fund that isn't a familiar name to them.

Prism

It seems to me that one or two strong funds from investment company promotes the rest. So Scottish Mortgage has a strong effect on Baillie Giffords other funds. Smithson breaks the IPO trust record because of Fundsmith. Maybe Barings haven't got an individually strong fund yet to help push the others.

This Japan fund does look interesting. Maybe a few too many holdings for me but decent long term performance.

aroominyork

Prism said:

It seems to me that one or two strong funds from investment company promotes the rest. So Scottish Mortgage has a strong effect on Baillie Giffords other funds. Smithson breaks the IPO trust record because of Fundsmith. Maybe Barings haven't got an individually strong fund yet to help push the others.

Possibly, though Barings have a number of funds in the hundreds of millions and two in the low billions. 

EthicsGradient

Perhaps Barings still suffers a reputational problem from the unfortunate Nick Leeson stuff all those years ago. I typed 'barings' into Google, and the autosuggest list started 'barings', 'barings bank', and 'barings bank collapse'. I'm a little surprised the current company uses the name, given how much others have changed names.

eastmidsaver

i think it's down to marketing as stated by a poster above.  but also,  got to remember the platforms can influence people for example the HL Wealth Shortlist, or any research articles on the platform.  with 1000's of funds out there, many people don't do research and rely on these lists.   in terms of size of fund,  there will be advantages and disadvantages to both smaller and larger ones.   do you your research, and if you want to invest, do it, if not, then don't.

underwhelmed_saver

eastmidsaver said:

i think it's down to marketing as stated by a poster above.  but also,  got to remember the platforms can influence people for example the HL Wealth Shortlist, or any research articles on the platform. 

If the woodford scandal has taught me anything, it would be to NEVER listen to any of these shortlists.