Fund universe shrinks in 2011

New funds were heavily out­numbered by fund closures in 2011 as managers shied away from launches.

Data from Lipper reveals that 72 funds were launched in the IMA sectors, compared with 99 fund mergers or closures.

As well as the IMA fund universe shrinking, there was also a slowing of launches, from 129 funds launched in 2010.

The slowdown in launch activity can partly be attributed to the vola­tility in markets and uncertainty over the global economy.

While launches showed signs of slowing in 2011, closures and mergers stayed constant with 2010, with only one fund fewer closed this year than last. As a result, in contrast to the fund universe growing in 2010, the number of funds available in the IMA sectors contracted in 2011.

A similar situation was seen in the closed-ended sector. Only six were launched against 15 in 2010. The launches raised £691m, compared with £1.7 billion raised in 2010.

The largest new investment trust this year was the Neuberger Berman (NB) Global Floating Rate Income fund, which raised £309m.

Launches in the closed-ended sector in 2011 were focused on income (Diverse Income Trust Henderson International Income), global growth (Damille Investments II), debt (NB Global Floating Rate Income and Duet Real Estate Finance) and forestry and timber (Forest Company). In December the launch of the Bilfinger Berger Global Infrastructure was also announced.

However, there were also numerous high-profile cancellations or delays of launches, including: Aberdeen Emerging Markets Smaller Companies, Fidelity India, Invesco Perpetual Global Income, Kotak Infrastructure, Schroder Opus Commodity and Securis Income.

In terms of open-ended funds, Patrick Connolly, the head of communications at AWD Chase de Vere, says he would prefer to see more closures than launches in the longer term. There are “too many funds” and too many sub-standard funds, which he hopes will be weeded out, he says.

Connolly adds: “Typically, we would see more launches than ­closures, but we haven’t this year because too many people are ­nervous [about the economic environment].”