Oversold and Undersold Funds
This is an analysis of Acuity’s portfolio of funds. It shows that, for the level of performance delivered by Acuity’s management, its funds were undersold during July, August and September by about 15%.
Acuity’s FPCM Analysis – Nov 2010
In the map below, each point represents one of Acuity’s funds. Those above the X-axis have delivered above average performance within their asset class while those below delivered sub-average performance over the last year. In the last three months, points to the right of the vertical Y-axis gained market share based of gross sales while those to the left lost market share.
Credo’s performance correction analysis indicates that Acuity’s fund offerings, taken as a group, were OVERsold by $8.1mn for the performance they delivered or about 15%. The market share gains/losses of most of the company’s funds were not dramatically out of line with performance. Notable exceptions were: (#2) Acuity’s Diversified Income Fund which is UNDERsold by 52% (equivalent to $26.3mn) for the level of performance it delivered; and (#3) The All Cap 30 Canadian Equity Fund which was undersold by $3.26mn.
- Overall, Credo estimates that Acuity’s products were OVERsold for the performance they delivered by $8.1mn in the last 3 months. Gross sales were $63.45mn, but Credo’s FPCM estimates that for the performance these products delivered, they should have garnered only $55.35mn in gross sales.
- There is a reasonable case to be made by Acuity’s sales and marketing team that advisors might support numerous Acuity products that are undersold for the performance they are delivering. Several products have been delivering returns that Credo’s model estimates should be rewarded with market share gains.
- At the same time products like the Acuity Dividend Fund (#12) are oversold for the performance they deliver. The marketing and sales teams need clear messaging that they can deliver to advisors – a story that explains why they might remain invested with a fund that is underperforming relative to peers.
Assets = Assets reported by IFIC at end of Sept of 2010
Sales = Gross sales reported to IFIC from July, Aug and Sept of 2010 Returns = 12 month returns (in %) at Sept 2010 SR = 12mo Sharpe Ratio at Sept 2010 Modeled Demand: Estimate from Credo’s FPCM Over/(Under): In $$$ terms, the degree to which the fund is Over- or Under-sold after controlling for performance (from Credo’s FPCM)