Magazine article American Banker

Trusted Equity Funds Key to 3Q Market-Share Gains

Magazine article American Banker

Trusted Equity Funds Key to 3Q Market-Share Gains

Article excerpt

The third quarter's stock market volatility took its toll in terms of market share on mutual fund companies that didn't offer equity portfolios already well-established in the brokerage community, a new study shows.

For several companies, even as they raked in new money, market share remained flat or declined during the three months ended Sept. 30, according to a study by Financial Research Corp., Chicago. Many of these companies, including big names like Federated Investors and Dreyfus Corp., are considered to be bond fund shops, niche players with aggressive portfolios, or sector funds.

Of 28 fund companies that sell through brokers, the ones that captured market share in the third quarter include Putnam Investments, OppenheimerFunds Inc., Aim Management, Fidelity Investments' Advisor Funds, Massachusetts Financial Services, John Hancock Funds, Fred Alger Management Inc., and Seligman Financial Services Inc. All offer well-known equity funds with long track records.

"There are some fund companies that are moving back into the top tier on the backs of a few equity funds that are household names with brokers," said Dennis Dolego, a principal at Financial Research Corp.

The fund industry has grown to more than 400 companies, and competition is fierce. Even the slightest movements in market share - hundredths of a percentage point - could represent billions of dollars, Mr. Dolego said.

And as the stock market rises and gets frothy, brokers are less likely to take risks on new funds.

"There are 15 gorilla funds out there that account for a significant market share," acknowledged James Greenawalt, executive vice president in charge of sales at Zurich-Kemper Investments. …

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