Keeping Top Ranking Tough for Funds
An S&P news release said that as of December 31, 2005, only 15.5% of large-cap funds, 10.2% of mid-cap funds, and 9.8% of small-cap offerings were able to hang onto their top-quartile ranking over three consecutive 12-month periods. Over the same time period, 32.2% of large-cap, 27.3% of mid-cap, and 25.7% of small-cap funds consistently maintained a top half ranking.
“When we viewed consecutive 12-month performance or
non-overlapping cumulative periods, consistent top
performers all had experienced management teams with tenure
higher than their peers,” said Rosanne Pane, mutual
fund strategist at Standard & Poor’s, in the news
release. “Experienced management teams can
successfully maneuver their funds through a variety of
market environments.”
Fourth-quartile funds had a higher probability of
disappearing. The three-year transition matrix noted
that 26.5% of large-cap, 26.5% of mid-cap, and 29.6% of
small-cap fourth-quartile funds went away due to mergers or
liquidations. A large percentage of fourth quartile
funds that survived still remained in the bottom half
(38.7% of large-cap, 29.4% of mid-cap, and 38.0% of
small-cap).
More information is
here
.