• The majority of institutional investors exclude from their selection radar mutual funds that have not accumulated a track record of at least three years and that have not achieved a certain level of assets under management.
• We test if the track record criteria make sense from a performance-and-risk point of view. We compare groups of newly launched funds and funds with track records of over three years. Also, we look at whether fund managers achieve better or worse results at the beginning of their fund’s lifetime.
• We find no evidence that funds with long track records enjoy better performance or incur less risk than new funds. On the contrary our empirical data suggest that newly launched funds post higher average total returns and lower risk data.
• We also find that fund managers enjoy slightly better performance during the first year of their tenures.

Bestinfond is a Spain-domiciled equity fund investing in European equities which has enjoyed outstanding performance over the last five years.We perform a detailed quantitative analysis encompassing performance, risk, style, expenses and holdings attribution.  We find that:
 
Bestinfond achieved outstanding absolute returns and performance adjusted for risk.Expense analysis showed a lower total expense ratio (TER) and relatively high portfolio turnover.The manager was very successful at stock selection but asset allocation in terms of countries or sectors added little value or on occasion had a negative contribution.The best active returns (outperformance) compared to the MSCI Europe Small Cap index were achieved in the Netherlands, Spain, and Portugal. On the other hand, stock picking in the U.K. was poor.The holdings profile of the fund showed a strong decreasing allocation trend to Spain and a rising one to the equity markets of countries such as Italy, Portugal, and Switzerland. The fund lived up to its value style focus.

In line with global equity and bond markets, hedge funds
overall delivered a solid return of 1.83% for July, according
to the Lipper Hedge Fund Composite Index. July’s gain
contributed to a partial recovery of the negative months’
readings, bringing year-to-date performance to minus
1.76%. Fixed Income Arbitrage (+3.23%) was the best
performing strategy for the month, benefiting from a
flattening yield curve in the Eurozone, yields in the shortto
medium-end segments of the U.S. yield curve edging
downward, and tightening spreads of Eurozone peripheral
debt versus German Bunds. Other Hedge (+3.19%) was
the runner-up, benefiting from real asset trading and
volatility-based position measuring strategies. Dedicated
Short-Bias (-0.75%) was the worst performing strategy for
the month.

• Funds investing in Asia topped the monthly rankings–notably those investing in Thailand and India, gaining 7.01% and 4.41% on average, respectively. Funds investing in Switzerland were also among the best performers during June: Equity Swiss Small- & Mid-Cap gained 6.16% and Equity Switzerland increased 4.19%.

•

Les fonds investis en Asie se sont montrés particulièrement performants d'après notre classement Lipper mensuel, notamment ceux investis en Thaïlande et en Inde, qui ont enregistré des gains de 7.36% et 4.37% respectivement. Il est à noter que les fonds investis en Suisse se sont distingués également durant le mois de Juin; les catégories Lipper Actions Suisse et Actions Suisses - PMC se sont accrues de 4.58% et 6.28% respectivement.

• Funds investing in Asia topped the monthly rankings-notably those investing in Thailand and India, gaining 7.36% and 4.29% on average, respectively. Funds investing in Switzerland were also among the best performers during June: Equity Swiss Small- &Mid- Cap gained 6.54% and Equity Switzerland increased 4.77%.

WITH GLOBAL STOCK MARKETS ENDING THE FIRST
SIX MONTHS OF THE YEAR ON A SHAKY FOOTING,
THE SECOND HALF OF THE YEAR POSES A
NUMBER OF PROFITABLE OPPORTUNITIES FOR
HEDGE FUND MANAGERS

* Among the Lipper equity categories funds investing in gold and precious metals, gaining 4.94%, topped the monthly rankings, thanks to their price movements. They were followed by funds investing in Asia–notably those investing in China and India, recording 1.64% and 0.01% on average, respectively.

* Among the significant losers during the month equity funds investing in Spain lost 10.12% and equity funds focusing on Eurozone small- & mid-cap companies fell 7.52% on average during the month.

•

Islamic funds invested in the GCC improved significantly their position in the rankings, performing at the same pace as those invested in Asian emerging markets, thanks to the positive returns witnessed in the seven GCC stock markets during first quarter 2010.

•

In terms of number of funds Southeast Asia dominated the market with a 45% market share, but in terms of assets under management the Gulf led the ranking with 59% market share.

•

Among significant losers, equity funds and money market funds investing in Europe lost 0.13% and 5.59%, respectively for Q1 2010, in part because of the depreciation of the Euro against the U.S. dollar (-5.69%).

What a difference a year can make! Taxable investors experienced the best of both worlds in 2009: double-digit returns along with minimal tax implications. As a direct result of the horrid returns witnessed in 2008 and the accumulation of tax-loss carryforwards, long- and short-term capital gains distributed to fund investors in 2009 declined significantly from those in 2008, while income distributions rose. However, coupling the magnitude and precipitous nature of the 2008 decline with the rapid and near-historic gain in 2009, we doubt whether the tax holiday will stick around as long as it did after the 2000-2002 meltdown. With the high likelihood of significant changes in the tax code by the end of 2010 and with the possible exhaustion of tax-loss carryforwards, taxable investors and their advocates would do well to become more cognizant of the impact taxes have on fund returns. In Lipper's Taxes in the Mutual Fund Industry—2010, we examine the history, trends, and current legislation regarding taxation of mutual funds, along with tools institutions, intermediaries, and investors can use to better manage their taxable mutual fund accounts.