Weak long-term performance, inconsistent returns and a greater focus on advisers than on investors at mutual fund companies are prompting wealthy investors to turn elsewhere, The Wall Street Journal reports. Only 11 of 38 top fund families, or less than one-third, have the loyalty of affluent investors, according to a report from Cogent Research.
Cogent based its findings on a survey of 4,000 fund investors with at least $100,000 in investable assets.
“The findings show it’s difficult for fund companies to produce consistent returns that investors can be pleased with,” said Cogent Research Managing Director Chris Brown.
However, there “is a small group of firms that has been able to generate sufficient long-term returns to build investor loyalty,” he said. Standing head and shoulders among them is Vanguard.
“Each of the firms earning top loyalty ratings is clearly communicating to investors that they’re not going to chase hot returns, and they’re dedicated to long-term investing,” Brown said. “It’s the consistency of fund performance that drives their loyalty.”