Paul Hennessy

Ten years ago, nearly 5,400 US-domiciled mutual funds were available to investors. Today only around 36% of them are still in existence, according to Morningstar data. The chances of long-term investors picking funds that are later merged or closed are fairly high. The potential upside for investors when funds merge may include lower expenses and stronger funds. But, if a fund is transferred to another manager following a corporate merger, investors may be saddled with higher management fees. There could also be tax implications when a fund closes, and In some instances, the investment strategy or objective could change. Being selective when investing in funds is therefore important. Our research proposes that fund managers with a low record of merging or closing their funds are more likely to be aligned with investors’ long-term objectives. Better yet, their funds could produce stronger returns over the long run. Please see the attached investment insight for more information on this research by my colleagues.


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