Photo: Big C Harvey
414 mutual funds have disappeared during the last 12 months, of which most were equity mutual funds according to Morningstar.The culling of these stock funds has been due to A) industry consolidation (one fund merges with another) B) poor performance (investors flee a particular underperforming fund) and C) the mass exodus of U.S. investment capital out of stocks and into bonds. (Which is something we’ve discussed on this site frequently)
Other funds go away because they’re lousy at managing money. Frontier Microcap lost all but $53,000 of the $1.6 million it once had in the 1990s, due mainly to wretched stock-picking. The fund lost an average 37% a year in its last 10 years of life, and departed this world in January.
It’s hard to believe the fund such as the above even lasted 10 years!
Even exchange traded funds, which have been wildly popular with investors this year, are vulnerable. 30-six ETFs have liquidated in the past 12 months, according to ETF Database. All but one are stock funds. Wisdom Tree shut 10 small, lightly traded ETFs in February. The funds represented less than 3% of the company’s assets at the time, ETF Database says.
Bond funds, however, are flourishing. The ICI counted 1,271 taxable bond funds in July, up from 1,260 a year ago.
The vast gulf between contracting mutual funds and expanding bond funds says much about where investor sentiment is these days.