Insight October 2012 Monthly Update

This issue of Insight examines if there is a link between relative investment performance (Morningstar Ratings™) and individual fund sales results. In other words, does performance matter? Does it matter more or less than it used to? Does it matter in all circumstances and for all companies? The answers to these questions are not straightforward. On the surface, aggregate industry results show a strong correlation between inflows and high relative investment performance ratings. A closer look, however, reveals that trends in product structure and asset class, or the power of the brand name or proprietary distribution, have the potential to overwhelm relative investment performance as drivers of sales results and retention success.