Mutual fund class of 2016 gets boost from international investments

Fund sponsors followed flows, which led to a reasonably happy outcome for many

Aug 18, 2017 @ 4:12 pm

By John Waggoner

The mutual fund class of 2016 — those that made their debut last year — has a certain worldly air about it that has helped performance this year.

Morningstar's database lists 327 mutual funds and 246 exchange-traded funds launched in 2016. Typically, new funds follow whatever fared well the previous year. This year, however, fund sponsors followed the flows — and that had a reasonably happy outcome for many.

For example, investors poured a net $203.3 billion into international stock funds and ETFs in 2015, according to the Investment Company Institute, while yanking $107.2 billion from their domestic stock counterparts. The industry turned out 70 new international mutual funds last year and 58 foreign stock ETFs, despite the fact that overseas markets fell 5.66% in 2015.

Those funds have scored decent gains in 2017. The average large-company foreign blend mutual fund has gained an average 17.4% through Wednesday, according to Morningstar. Nevertheless, the average new foreign fund has gained 16.69% this year. New funds are typically small, which can be an advantage, but they often have above-average expense ratios — a distinct disadvantage. New open-end diversified emerging markets funds have lagged by a similar amount.

Results for new foreign ETFs were more varied, as sponsors added various new factors to international indices. JPMorgan Diversified International Currency Hedged ETF (JPIH), for example, hedged away much of the foreign markets' gain by reducing currency risk. The fund has gained 9.87% this year. The top performer in the category, Barclays ETN+ FI Enhanced Europe 50 ETN Series B (FLEU), got to the top of the heap by adding leverage. It's up 33.42% this year.

In a soaring year for stocks, it was still possible to roll out some turkeys. Add leverage to long-suffering energy master limited partnerships, for example, and you get the UBS ETRACS 2xMonthly Leveraged Alerian MLP Infrastructure Index ETN SeriesB (MLPQ), which has relieved investors of 30.37% of their accounts this year. And, proving once again that friends don't let friends trade volatility, REX VolMAXX Long VIX Weekly Futures Strategy ETF (VMAX) has lost 64.76% this year.

To be fair, leverage, like dynamite, can have good uses as well as bad. Direxion Daily CSI China Internet Bull 2X Shares (CWEB), which has $19.4 million in assets, has soared 147.17% this year.

Among the success stories from the class of 2016:

Vanguard International Dividend Appreciation ETF (VIGI), with assets of $628.2 million. The fund has gained 20.6% this year.

UBS AG FI Enhanced Europe 50 ETN (FIEE), a leveraged Europe fund, has jumped 33.87% and has assets of $542.3 million.

• First Trust Nasdaq Bank ETF (FTXO), is up just 1.3% this year, with assets of $1 billion.

0
Comments

What do you think?

View comments

Recommended for you

To put independent advisers on equal footing with larger players, AdvisorEngine has introduced a new client portal. Rich Cancro says the new white-label solution will help drive your business forward.

Video Spotlight

Recommended Video

Channels

Latest news & opinion

401(k) plan sponsors increasingly hiring fiduciary advisers

The DOL fiduciary rule and excessive-fee lawsuits are combining to raise the profile of fiduciary retirement plan advisers.

How much did industry groups spend on political campaigns last year?

Organizations representing brokerages tend to outspend trade groups for investment advisers.

SEC bars former Merrill rep Thomas J. Buck over commissions

Accused of charging clients excessive fees and commissions, Thomas J. Buck has already been barred by Finra and has pleaded guilty to a criminal charge.

Is ESG investing going mainstream?

Despite advisers' misgivings, asset managers are coming around to the idea that a company's stance on environmental, social and governance issues is a good proxy for future success.

Despite January's run-up in stocks, investors headed to bonds

More than $46 billion went to taxable bonds last month, versus $17 billion flowing into stock funds and ETFs.

X

Hi! Glad you're here and we hope you like all the great work we do here at arjuna-design. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting arjuna-design.com? It'll help us continue to serve you.

Yes, show me how to whitelist arjuna-design.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Last News

fica medicare tax rate 2014 how to report roth ira conversion on tax return templeton emerging market bond fund report wages for ssi financial advisory firms rankings ss disability benefits calculator fidelity investment centers franklin income series mutual fund fee structure financial advisor wealth management salary ira account chase lockheed martin corporation master retirement trust wells fargo advantage multi sector income fund vanguard small cap growth index inv penn treaty long term care insurance from graham to buffett and beyond credit suisse merger arbitrage liquid index h & r block fees for filing taxes is medicare deducted from social security check generation x y and baby boomers morning star ratings for mutual funds how to buy stocks as a teenager financial representative northwestern mutual job description franklin low duration total return fund woodbridge mortgage investment fund 1 llc is primerica good life insurance social security form 521 do i need to report roth ira contributions pension lump sum vs monthly payments calculator charitable gifts from ira wells fargo financial consultant what are the rarest coins t rowe price san francisco fidelity bond index fund eaton vance high income opportunities fund social security wage maximum market linked cd wells fargo merrill edge 529 review required minimum distribution chart