Survivor : Fund Liquidations In 2001

Overview: This article gives an insight look to the status of fund’s liquidation. It states that many mutual funds with heart-breaking performance records exist so long as they attract and retain enough assets. In addition, many very small funds remain afloat for years simply because their families can afford to operate them unprofitably. However, regardless of why fund liquidations happen, the outcome to shareholders is undoubtedly painful. Last year, a record 225 funds were liquidated, topping the previous record set in 1998 when 222 funds shut down. Year to date, through the end of the first quarter, another 40 funds joined the liquidation club and set the stage for what could potentially be another record year for fund liquidations. In this context article, focuses on few points such as investors should always use caution when evaluating any mutual fund, for fear of liquidation or to gauge performance. Investors should avoid funds with poor performance records all together. However, for the industry itself, it may be better that, in theory, only the strongest survive. Years of rapid growth and increased competition have reshaped the industry into a Darwinian model of survival of the fittest. The funds that are not fit will quickly become extinct to investors. This process of natural selection will serve as the decisive ruler making some funds dissolve, while others evolve. In the end, the ones that survive may very well be…. the best of breed.

(Is this item miscategorized? Does it need more tags? Let us know.)

Format: HTML | Date: Jan 2003 | Pages: 1