One of the major early themes of 2012 has revolved around fund launches – that is, the sheer number of them.
According to Morningstar, 37 onshore and offshore retail products have been registered with them since the turn of the year, and this does not include several reported in the past few weeks.
It also does not include other funds that have changed their mandate – for example, Martin Currie re-launching its European fund as European equity income.
Perhaps it’s not surprising in the present environment that income has been a recurring theme, with new emerging market, Asian and corporate bond income funds all being brought to the table. However, this year has also seen several strategic bond, absolute return and even European total return launches, as groups look to expand their retail offerings. (Comment continues below)
The plethora of launches has sparked a debate between those who argue for innovation and those saying that groups should be spending more time and money on their existing ranges.
According to FE Analytics, there are some 3,000 funds to choose from across all IMA sectors at present. At the end of January, more than 150 of these did not have a one-year track record.
This week’s news analysis, by Gary Jackson, presents the arguments for and against this wave of fund launches. The accusation against the industry is that more time and money is spent on launching funds than on sorting out underperforming products. In defence of new launches, fund groups claim innovation takes the industry forward, with recent examples including strategic bond funds. Yet the past few years have been littered with ideas, many of which had huge budgets committed to them but are now nowhere to be seen. I can’t recall the last advert or call I had promoting 130/30 funds, for instance.
I find myself sitting on the sidelines. If a fund launch is innovative and genuinely adds something not so far available, it has to be a good thing. However, groups should also be spending more time and money ensuring their existing funds are up to scratch and not just let them quietly drift away.