Lipper: First quartile performance key to inflows

Ed Moisson 200
Ed Moisson

Analysis by fund data specialist Lipper has revealed first quarter performance over one- and three-year time periods was dominant in driving sales.

However, the relationship between first quartile performance over three- and five-year time periods deteriorates, reports Lipper.

Inflows into funds with second quartile performance are most likely with rolling one-year returns, it found.

According to Lipper, sales per IMA sector average £173m for funds with first quartile performance over one-year periods, with second quartile performance generating average sales of £13m.

Head of UK research Ed Moisson says: “This research suggests that some investors are taking advantage of a manager’s ‘winning streak’ or, more precisely, the short-term persistence in fund performance.

“These findings do not mean that a fund manager has to be short-termist, but the sales patterns identified put pressure on a manager’s recent track record if a fund wants to achieve significant inflows.”

Funds in the Mixed Investment 20-60% Shares sector are successful in generating inflows for poorer performers, notes Lipper, while second quartile funds in the Sterling Corporate Bond sector have inflows through one-, three- and five-year rolling periods.

Moisson says first quartile funds in the UK All Companies sector have struggled to attract inflows, with first quartile performance stemming outflows rather than generating inflows.