Mutual fund lifespan

newleaseholder

I have been investing through my ISA on a mutual fund for years, it has monthly dividends and good return for my risk appetite, though the fund has been around since early 2004, that's 20 years!

What's the lifespan of a mutual fund or could it be that they can go on and on as the portfolio is managed?

Linton

newleaseholder said:

I have been investing through my ISA on a mutual fund for years, it has monthly dividends and good return for my risk appetite, though the fund has been around since early 2004, that's 20 years!

What's the lifespan of a mutual fund or could it be that they can go on and on as the portfolio is managed?

Funds can go on and on.  A common reason they dont is because the fund manager gets taken over, but even then the money if often moved to another fund or the same fund under a new name.

EthicsGradient

I've never seen a limited lifespan for a unit trust or OEIC. Investment trusts occasionally have a motion to continue the company in their AGMs. The management company can wind up a unit trust or OEIC whenever it feels like; investors in ITs get to vote on it, though that will typically be dominated by institutional investors. In practice, OEICs are more usually merged rather than just liquidated (I've had the latter happen to me once - very annoying, from a capital gains point of view).

dunstonh

What's the lifespan of a mutual fund or could it be that they can go on and on as the portfolio is managed?

Depends on what you mean by mutual fund.  That is an Americanism that didn't take off over here.    Some treat it to mean Unit trusts or OEICs but in reality, it could mean any unit linked fund.

UT/OEICs are open ended.  Pension funds and life funds are open ended.    Some have been around for generations.

they will go on for as long as their fund house feels they are profitable or they are bought and consolidated with another fund or shut down because they are no longer viable (tends to be funds under £50m that show no signs of getting more money).

JohnWinder

It seems it varies. I think these are global figures....

'According to the Global Asset Management Report 2024 from Boston Consulting Group, only 37% of all mutual funds launched in 2013 still existed by 2023. (2) This is a significant decrease compared with 2010 when 60% of funds that had been launched a decade earlier were still in operation.'

https://www.timeline.co/blog/mere-survival-is-an-achievement-for-active-funds

Linton

JohnWinder said:

It seems it varies. I think these are global figures....

'According to the Global Asset Management Report 2024 from Boston Consulting Group, only 37% of all mutual funds launched in 2013 still existed by 2023. (2) This is a significant decrease compared with 2010 when 60% of funds that had been launched a decade earlier were still in operation.'

https://www.timeline.co/blog/mere-survival-is-an-achievement-for-active-funds

I would not be surprised if only 37% of uk fund management companies in 2013 are still around under the same name.

EthicsGradient

Linton said:

JohnWinder said:

It seems it varies. I think these are global figures....

'According to the Global Asset Management Report 2024 from Boston Consulting Group, only 37% of all mutual funds launched in 2013 still existed by 2023. (2) This is a significant decrease compared with 2010 when 60% of funds that had been launched a decade earlier were still in operation.'

https://www.timeline.co/blog/mere-survival-is-an-achievement-for-active-funds

I would not be surprised if only 37% of uk fund management companies in 2013 are still around under the same name.

It's not clear from the BCG report itself, but the link says it was about "mutual funds" (American report, again not clear if that's a global or American-only figure) in their same form - ie not merged with something else, or closed entirely. I think a name change alone wouldn't count. But it's also only about those launched in 2013, so this may just indicate there isn't much call for yet more funds, and those that have been tried haven't done well.

dunstonh

Financial services have followed the same trend as other industries, with consolidation being rife.    The number of firms across all areas has been reducing year on year, and therefore, funds will follow that.

I don't think there has been that many hard closures.  I suspect most are through mergers.

Linton

EthicsGradient said:

Linton said:

JohnWinder said:

It seems it varies. I think these are global figures....

'According to the Global Asset Management Report 2024 from Boston Consulting Group, only 37% of all mutual funds launched in 2013 still existed by 2023. (2) This is a significant decrease compared with 2010 when 60% of funds that had been launched a decade earlier were still in operation.'

https://www.timeline.co/blog/mere-survival-is-an-achievement-for-active-funds

I would not be surprised if only 37% of uk fund management companies in 2013 are still around under the same name.

It's not clear from the BCG report itself, but the link says it was about "mutual funds" (American report, again not clear if that's a global or American-only figure) in their same form - ie not merged with something else, or closed entirely. I think a name change alone wouldn't count. But it's also only about those launched in 2013, so this may just indicate there isn't much call for yet more funds, and those that have been tried haven't done well.

If a name change doesnt count, what about a change of fund manager or investment strategy or changes in fund classes?   On what data is the conclusion based? I think we need a lot more information before we can make any judgement. 

And then we have the question of numbers of funds and their size.   Does the 37% mainly consist of significant global funds or very small highly niche funds that simply failed to find a viable market?  For some reason such reports (eg the SPIVA ones), always focus on numbers of funds rather than then a cap weighted list or one weighted by number of investors

All the report seems to say on their 37% assertion is...

Fewer new products are surviving despite attempts at innovation. Despite asset managers’ continuing efforts to develop new offerings, many have not been successful. In fact, only 37% of all mutual funds launched in 2013 still existed by 2023. This is a significant decrease, compared with 2010 when 60% of funds that had been launched a decade earlier remained active. 

Bostonerimus1

Some investment trusts (closed end funds) have been around for 150 years and in the USA the open ended Vanguard/Wellington mutual fund is almost 100 years old. However, there are plenty of funds that close after a few years due to poor performance or buyouts and re-organization.

Linton

I have analysed the UT funds I held at some point in 2013 to see if they were still around:

42 funds total

30 still exist or easily recognisable under a different name after the fund manager was taken over and current fund founded pre 2013

12 funds not easily recognisable after fund manager was taken over

1 could not be found (J P Morgan Balanced fund).  Unlikely to have been due to very low performance.             Perhaps I recorded the name wrongly/incomplete or it merged.

So I see no evidence of massive numbers of closures of funds due to poor performance between 2013 and now.