Le Lézard
Classified in: Business
Subjects: SVY, ECO

Morningstar's Annual "Mind the Gap" Study Shows Better Timing and Market Conditions Led to Solid Investor Returns


CHICAGO, June 12, 2018 /PRNewswire/ -- At its 30th annual investment conference in Chicago, Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today published its annual study of investor returns, "Mind the Gap," which measures the performance of the average dollar invested in a fund and estimates the impact investor behavior had on investment outcomes. Overall, the study shows that the gap between U.S. open-end funds' reported total returns and the returns experienced by investors narrowed to 0.26 percent per year over the decade ended March 31, 2018.

The "Mind the Gap" study leverages the proprietary Morningstar® Investor Returnstm data point, which estimates a fund's dollar-weighted return by incorporating the effect of cash inflows and outflows from investors' purchases and sales, as well as the change in a fund's assets. The "gap" refers to the difference between funds' dollar-weighted and time-weighted returns, reflecting how opportunely investors timed their investments.   

"Investors tend to buy high or sell low when markets are volatile, potentially missing out on a fund's gain. However, with the last bear market far in the rear-view mirror, investors' steady investment contributions over the last 10 years appear to have paid off," said Russel Kinnel, chair of Morningstar's North America ratings committee and editor of Morningstar® FundInvestorSM. "Similar to last year's Mind the Gap study, we found that investors have largely succeeded in using balanced funds, such as target-date funds, where the behavior gap was narrow. On the flipside, investors fared poorly with alternative funds, which had the worst dollar-weighted returns, reflecting the funds' generally lousy performance."

Key highlights of the study include:

It's important to note that estimates of the behavior gap can be sensitive to the inputs. For instance, if comparing funds' aggregate dollar-weighted returns to their asset-weighted?instead of equal-weighted?average total returns, the calculation can yield a materially different estimate of the behavior gap. Given this, the behavior gap should be viewed as a range of potential shortfall or surplus investors experienced with their fund investments in aggregate over a given time period.

The "Mind the Gap" study is available here and an article summarizing the findings is available on Morningstar.com® here. The U.S. investor returns study is available in the June 2018 issue of Morningstar FundInvestor.  

Morningstar has approximately 120 manager research analysts worldwide who cover approximately 4,500 funds. The company provides data on approximately 233,200 open-end mutual funds, 11,100 closed-end funds, and 15,000 exchange-traded product listings as of March 31, 2018.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $201 billion in assets under advisement and management as of March 31, 2018. The company has operations in 27 countries.

Morningstar's Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Morningstar's Manager Research Group produces various ratings including the Morningstar Analyst Rating for funds and the Morningstar Quantitative Rating for funds. The Analyst Rating is derived from a qualitative assessment process performed by a manager research analyst, whereas the Morningstar Quantitative Rating uses a machine-learning model based on the decision-making processes of Morningstar's analysts, their past ratings decisions, and the data used to support those decisions. In both cases, the ratings are forward-looking assessments and include assumptions of future events, which may or may not occur or may differ significantly from what was assumed. The Analyst Ratings and Quantitative Ratings are statements of opinions, subject to change, are not to be considered as guarantees, and should not be used as the sole basis for investment decisions. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.

©2018 Morningstar, Inc. All Rights Reserved.

MORN-R

Media Contact:
Sarah Wirth, +1 312 244-7358 or [email protected]

Morningstar logo (PRNewsFoto/Morningstar Research Inc.) (PRNewsfoto/Morningstar, Inc.)

 

SOURCE Morningstar, Inc.


These press releases may also interest you

at 09:30
Connolly Brothers Inc., a construction management firm serving private commercial, industrial and institutional clients, recently completed a 52,000 square-foot design-build fit-up project for Calare Properties. The facility, located in Milford, MA,...

at 09:30
Policybazaar, India's leading online insurance marketplace, is witnessing a significant increase in non-resident Indians (NRIs) choosing term insurance from India via its platform. This surge is driven by the unparalleled ease, benefits and...

at 09:27
My Daily Leadership, a pioneering leadership development company, has announced the launch of its proprietary Leadership Assessment tool. Designed to help leaders benchmark themselves against top leaders across the globe, the assessment helps to...

at 09:20
This strategic move...

at 09:07
Olympus announced today that it has been awarded a contract for its advanced energy portfolio by Provista Inc. This new, nationwide agreement provides Provista members with negotiated pricing for Olympus® energy products, including the...

at 09:05
Popular, Inc. announced today that it expects to report its financial results for the first quarter ending March 31, 2024, before the market opens on Tuesday, April 23, 2024. Popular will hold a conference call to discuss the financial results the...



News published on and distributed by: