• In line with conventional funds Islamic funds recorded strong positive performance in emerging markets.
• In terms of number of funds Southeast Asia dominated the market with a 46% market share, but in terms of assets under management the Gulf led the ranking with 60% market share.

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Research into some key issues relating to fees and expenses for European funds.  Contents include an analysis of how much companies vary their fees across a fund range; discussion of whether fees will fall in light of Ucits IV and other factors; the rising prominence of performance fees; some thoughts on retail investors' understanding of fund costs.

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This report presents authoritative data on mutual funds’ fees and expenses in the US and several key European markets. It provides a useful first look at the European fund expenses landscape for US companies considering establishing funds in Europe, as well as insights into some practices relating to US fees for European companies. (Executive Summary only - Please contact us to purchase the full version of the report)

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In 2008 massive declines in the overall market helped mitigate some of the losses from tax drag that investors might have witnessed, but many investors still experienced a significant double-whammy. Taxable mutual fund investors lost an estimated $15.8 billion in taxes to Uncle Sam during one of the worst market declines since the Great Depression. While that amount was significantly lower than the record amount surrendered in 2007, any tax drag incurred by buy-and-hold investors, especially during periods of large market losses, is counterproductive to the concept of wealth creation (preservation) and savings. While in this paper we frequently allude to the possibility of a tax holiday for equity fund investors over the next few years, we stand pat in our call to keep an eye on tax drag. Because the nearly unprecedented decline in the market in 2008 happened so quickly and so broadly and because many funds need to stay nearly fully invested, loss realization--and the creation of tax loss-carryforwards--may not be as widespread as we are anticipating.

- In 2008 the estimated taxes paid by taxable mutual fund investors declined 53% from the record amount surrendered in 2007 to $15.8 billion, a sum hovering around the ten-year average.
- On average over the last ten years taxable mutual fund investors gave up on an annual basis 1.13 percentage points (equity funds) to 2.13 percentage points (fixed income funds) in return because of taxes.
- Taxable equity and fixed income mutual fund shareholders surrendered over 78% and approximately 58%, respectively, of their load-adjusted ten-year returns because of taxes.
- Taxable fixed income funds saw 182% and 296% increases in short- and long-term capital gains distributions, while income dividend distributions declined 2% from the previous year.
- For the one- three-, five-, and ten-year periods ended December 31, 2008, taxable fixed income funds outperformed their tax-exempt cousins o

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New evidence of a five year cycle in investor sentiment suggests that recent concerns about Gilt demand will resurface alongside volatility between equity and bond funds. This will continue for some time, with investment bubbles and extreme events along the way.

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Taxes took a large bite out of taxable mutual fund investors' returns in 2007. Now that the reminiscences of the 2000 to 2002 market decline have worked their way out of mutual funds' financial statements and tax-loss carryforwards have dried up, it's time to pack up the umbrella and put those fins and goggles away because the tax holiday of the first part of the new century is over. The mutual fund industry distributed its largest amount of distributions on record in 2007, and with that buy-and-hold taxable mutual fund investors surrendered a record-setting amount of their hard-won profits to Uncle Sam's coffers. With the likelihood that recent tax-law breaks will sunset in 2010 and substandard returns have already descended upon us, it would be prudent for taxable mutual fund investors to keep an eye on one of the main drags of their performance: taxes. Until our Congressional leaders step up and put mutual fund investors on the same level playing field with investors in other investment vehicles, taxable mutual fund investors and their advocates will need to advocate for themselves. In Lipper's "Taxes in the Mutual Fund Industry—2008," we provide the tools, background, and benchmarks taxable investors and their advocates can use to better understand the impact Uncle Sam has on shareholder returns and ways to apply those concepts to wring out extra returns from taxable mutual fund portfolios.

- Mutual fund distributions hit a record high in 2007! Regulated investment companies distributed $581.6 billion, breaking the record set in 2006.
- In 2007 the estimated taxes paid by taxable mutual fund investors increased 42% from those of 2006, and buy-and-hold taxable mutual fund investors surrendered a record-setting $33.8 billion in taxes to Uncle Sam, easily surpassing 2000's record amount of $31.3 billion!
- For the five-year return period reviewed, before-tax returns were a good indicator of pre-liquidation after-tax returns in the fixed inc

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The authors created a series of automated heuristics to aid in the "lights-out" selection of securities for portfolio formation. The heuristics were composed of various measures on each security such as expense, size and volume as well as momentum models built from the universe of securities. A 24-quarter examination period, covering the time from last quarter 2000 to first quarter 2007, was used. For each of these quarters, portfolios were created from the same universe, initially by a research analyst and then from a variety of heuristic models. The actual performance of each portfolio was computed at the end of each quarter, and comparisons were made among the heuristic models as well as between the heuristic models and the analyst models. After adjusting the performance for risk, the "best" heuristic model (formed as a function of volume and momentum modeling) outperformed the analyst model for the later two-thirds to three-quarters of the evaluation time frame, yielding a compounded difference in return that ranged from just under 40% to just under 330%. A hypothesis explaining this result, related to increases in the cardinality of the universe, was offered but not tested. A cautionary comment with respect to the aptness of the analyst-heuristic comparison was offered.

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Comparing a set of funds’ compounded returns over a given period allows us to construct a strict ranking of the funds involved; however, there is no guarantee that rankings from different periods will be the same. In fact, it is likely the rankings will differ significantly. We can, however, use a series of rankings to determine the frequency with which fund a outperforms fund b. Using these frequencies we can construct a weighted directed graph and its associated adjacency matrix and use them to determine an ordering on our set of funds.

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The May Asset Allocation Poll showed the second increase in a row in the average equities component with reference to a global balanced portfolio.
The average percentage invested in the bonds component of a global balanced portfolio decreased further in May.
The cash component in global balanced portfolios decreased again on average in May.

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Die April Asset Allocation Umfrage zeigt einen leichten Anstieg der Aktienquote in den globalen gemischten Portfolios.
Der Rentenanteil der gemischten globalen Portfolios wurde im Berichtsmonat gesenkt.
Die durchschnittliche Kassenhaltung in den globalen gemischten Portfolios sank im selben Betrachtungszeitraum aufgrund des leicht gestiegenen Investitionsgrades.

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