Funds Celebrating Birthdays? Cheers To That

It’s silly, isn’t it, to wish a mutual fund, exchange-traded fund (ETF) or some other investment product a happy birthday?

  Courtesy of Will Clayton, CC-BY

Courtesy of Will Clayton, CC-BY

Back in the day, when I was responsible for a fund company shareholder newsletter, I used to hate it when product managers suggested that we celebrate a fund birthday. Can you say “party of one”?

But I’m not rolling my eyes so much anymore, and for two reasons.

1. Old Funds Can Be Shareholder-Friendly

There's more awareness now of the “survivorship” of funds and, in contrast, the effect that fund closings have on shareholders.

Of the mutual funds in operation in 1995, less than 40% still existed in 2013. The remaining funds were either closed or merged into other funds. This is according to a study by CFAs Daniel Kern and Gerard Cronin with Tim McCarthy, featured in a December BrightTalk presentation called “Mutual Fund Roulette: Will Your Clients Outlive Their Mutual Funds?” McCarthy’s book, The Safe Investor, was published this week and you may see mention of this study in book reviews.

If you have a venerable old fund coming up on an anniversary—and the study results suggest that it’s a reasonably good fund to still be in existence—it wouldn't hurt to show it a little love. In the best case, you're throwing a spotlight on a fund whose age gives it a certain gravitas. At the very least, a birthday message would remind your clients (advisors and shareholders) that investors in this fund were spared a closing. 

2. The Partying Can Be Purposeful

The communication surrounding a product milestone is able to be much richer today. While all we had space for in the quarterly print newsletter was images of confetti and balloons, there's so much more that can be done online.

Let's take a look at how a few funds have been celebrated.

ETF Providers Get Nostalgic

When you consider that a mutual fund needs a three-year performance record (a Morningstar evaluation threshold) just to be taken seriously, an ETF turning five may not seem like much of an accomplishment.

But many ETFs have legitimate bragging rights when it comes to innovating and opening up access to various markets. In the coming years, you may be drafted into taking part in quite a few ETF birthday celebrations.

In April 2012, iShares wrote a blog post celebrating five years of HYG (the iShares iBoxx High Yield Fund) without overcheering. It was a proportionate remembrance of the environment when the ETF launched.

"...A number of investors were skeptical. The lack of liquidity in the high yield bond space made it an asset class no ETF had dared to enter before. A Seeking Alpha article at the time declared the fund was 'effectively an experiment that can only be judged over time.'”

Today on, you’ll still see this quiet image, which is linked to a 2012 whitepaper that recalls the 10-year anniversary and launch of the iBoxx Investment Grade Corporate Bond Fund (LQD), and with it the beginning of fixed-income ETFs.

Demonstrating Conviction And Consistency

When the ClearBridge Aggressive Growth Fund turned 30 last year, it received a full tribute on a Web page, and related communications materials all bear a Celebrating 30 Years seal.

One of the portfolio managers appeared in a natural-seeming video and made a few points about consistency—"So, I'm the new guy on the team and I've been here 17 years...." Below is a screenshot of the video, you'd have to click on it to go to the site to see it.

Reliving The Old Moves

This year is the 25th for BlackRock Global Allocation Fund, and the firm is showing its pride in a few ways. There’s a video, embedded below.

Also take a look at this interactive chart, which displays explanations of the fund’s positioning along a timeline while at the same time adjusting its risk and return chart. Slick.

If a "Celebrate Fund XYZ" meeting pops up on your calendar, don't go with a bad attitude. The party planners will be looking to you to bring the digital fireworks.