Investing August 14, 2006

S&P: A Good Fund May Not Stay That Way

August 14, 2006 (PLANSPONSOR.com) - Investors who find a top-performing mutual fund should enjoy a good thing while they have it, according to a Standard & Poor study.
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A Standard & Poor news release said that through June 30, 2006, its scorecard shows that very few funds manage to consistently repeat their top half or top quartile performance.

According to the announcement, over five years ending June 30, 2006, 58 (10.8%) large-cap funds, 12 (7.9%) mid-cap funds and 19 (7.7%) small-cap funds kept their hold on a top-half ranking over five consecutive 12-month periods. A total of three large-cap funds (1.12%), zero mid-cap funds and one small-cap fund (0.81%) maintained a top-quartile ranking over the same period.


“Our research has found that consistent, top performing funds tend to share similar characteristics, in particular, more experienced management teams which can successfully maneuver their funds through volatile markets,” Standard & Poor’s Mutual Fund Strategist Rosanne Pane said in the news release. “Consistent, top performers also tend to have lower expense ratios and minimize the expense drag on performance.”

Looking at longer time horizons, only 17.5% of large-cap funds with a top quartile ranking over five years ending June 30, 2001 maintained that level over the next five years ending June 30, 2006. Only 6.8% of mid-cap funds and 18.7% of small-cap funds repeated their top quartile performances over the same period.

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According to the news release, 36.3% of large cap funds, 26.4% of mid cap funds and 47% of small cap funds with a top half ranking over five years ending June 30, 2001 stayed there over the next five years ending June 30, 2006.

Fourth quartile funds continue to have a higher probability of disappearing. The five-year transition matrix notes 41.9% of large-cap, 41.9% of mid-cap and 39.2% of small-cap 4th quartile funds disappeared due to mergers or liquidations, the news release said. 

Standard & Poor’s Mutual Fund Performance Persistence is available at  www.standardandpoors.com .

Administration August 12, 2006

CPAs and CFPs Top Trust/Ethics List

December 20, 2005 (PLANSPONSOR.com) - A new survey found that CPAs and certified financial planners were the easiest to trust and showed the most ethical behavior of all the professionals providing financial advice to individuals.
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A news release from AFA Financial Group also said that those at the other end of the ethics and trust scale included television and radio show financial hosts.

The announcement said the respondents were asked to rate 11 professions using a five-point scale ranging from “not trustworthy at all” to “extremely trustworthy.”

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The press release said that CPAs had the highest overall score and were selected more than any other profession as being “extremely trustworthy” (22.77%). Certified financial planners had the second highest overall score and were selected as being “extremely trustworthy” by 18.32%. Meanwhile, financial television show hosts attracted the lowest ranking, with only 2.77% calling them “extremely trustworthy.”

More than 61% of respondents said that they would be comfortable with a CPA, who is licensed to provide financial products/services also giving them personal investment advice. Some 83.84% indicated that they would be comfortable with the CPA also providing financial advice after full and complete disclosure of his/her commission.

Of the survey respondents who have employed a certified financial planner (CFP) in the last five years, 17.82% said they were “extremely satisfied” and 58.08% said they were “satisfied” with the CFP’s performance.

When asked “how do you primarily make financial investment decisions,” 30% identified “with counsel from a certified financial planner” and 16% “with counsel from an accountant or CPA.” The most frequently identified source of outside input was “from family and friends.”

Amplitude Research conducted the survey using its Panelspeak Web panel December 15 to 17, 2005. Respondents had investments besides their primary residence (stocks, bonds, mutual fund, money market fund, real estate, or individual retirement account). Some 55% of the respondents had household income over $60,000, with 20% having household income over $100,000. There were 1,007 survey completions.

For an executive summary contact Michael Krems of KremsPR on behalf of AFA Financial Group at 805-496-8166 or send an email to  krems@kremspr.com .

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