Insight November 2002 Monthly Update

“This issue of Insight identifies the year’s most successful fund companies based on a variety of quantitative criteria. First, though, we update the annual analysis of sales, redemption, and retention activity that we launched in October 2001. The headline of last fall’s analysis declared, “The glass is half full—really.” At that time, we found that what seemed to be over- whelming concern about redemptions was misplaced. Redemption rates were actually low by historical standards. The big problem was a lack of sales to offset the money going out. By and large, most investors were hunkering down—neither buying nor selling. One year later, the industry is still enveloped in a cloud of gloom and doom. The industry remains mired in net redemptions, and anyone who only reads headlines would likely conclude that Fundland is rapidly becoming a ghost town. Guess what? The glass is still half full. Well, almost half full. Really. Look at net new money—gross sales less redemptions. Figure 1 shows that long-term funds posted a positive flow for the first 10 months of this year. Yes, positive. Sales exceeded redemptions in both absolute dollars and when measured in relation to total assets at the start of the year. But don’t break out the champagne; this lead is more narrow than it was last year. Net new money totalled $7.8 billion at October 31 versus $9.8 billion for the same period last year. Nevertheless, the fact that this year’s flow remained positive was a remarkable achievement in such a difficult environment.”