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News Bites | Leadership in the fund industry

November 30, 2011

News Bites is an occasional column in NICSA News that collects memorable facts, quotes and insights from our recent reading.

This edition of News Bites looks at an article by Bob Pozen and Theresa Hamacher, published by the Financial Analysts Journal in December, at a speech by Don Phillips of Morningstar given at the Business & Wealth Management Forum held in October, and at McKinsey & Company’s most recent annual review of the asset management industry. All three discuss factors leading to success in the mutual fund industry. These were our takeaways:


1. “Leadership in fund management isn’t permanent.” (Phillips)  — as the following chart from Pozen and Hamacher dramatically illustrates:

2. “The winners had a long-term investor focus.” (Phillips)

3. “The best predictors of success in the U.S. fund business are the focus and organization of the fund sponsor.” Pozen and Hamacher demonstrate that firms dedicated to asset management have gained market share at the expense of diversified firms. They looked at the assets under management of the top 25 fund complexes over a 20 year period:

4. McKinsey reached a similar conclusion, noting that the market share of independent firms grew from 28% of assets under management in 2002 to 54% in 2011. (McKinsey & Company)

4. Diversified firms have been most successful when building off traditional strengths.

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