Two Fidelity Alumni Aim to Reveal Fund Outperformers ... In Advance
Reported by Neil Anderson, Managing Editor
Which mutual funds are going to leave their competition in the dust? Fundsters may repeat the required-by-law "past performance does not guarantee future results" mantra, but a pair of Fidelity alumni are staking a stab at anticipating outperformance. Today Investment Risk Management Systems unveiled its online FundReveal tool for doing just that.
"No one can tell what a mutual fund's return will be in the future, but FundReveal identifies funds that beat the market persistently," stated Ani Chitaley, IRMS founder and president and an ex-senior vice president in Fidelity's equity division.
Chitaley and Anthony DuBon, IRMS vice president of strategy and operations (another Fidelity alum) also launched a blog, Mutual Fund Performance Forum.
Company Press Release
ASHLAND, Mass., June 21, 2010 - Investment Risk Management Systems Inc. (IRMS) today announced the introduction of FundRevealSM, a unique on-line tool that uses a patent-pending, proprietary methodology to identify mutual funds most likely to outperform the market in the future.
“No one can tell what a mutual fund’s return will be in the future, but FundReveal identifies funds that beat the market persistently,” according to IRMS Founder & President Ani Chitaley, Sc.D. “FundReveal helps investors lower the risk of loss in their portfolios while potentially increasing returns by identifying funds whose managers demonstrate superior investment decision-making capability.”
IRMS developed FundReveal for individual investors, financial advisors and asset managers. It uses risk, return and persistence measures to chart the performance of almost 20,000 mutual funds and compare them with the S&P 500.
The FundReveal approach differs from other methods by analyzing individual funds in the context of the entire U.S. funds universe, always considering the risk-return that together defines performance. The proprietary Persistence Rating captures the tendency for a fund to regularly deliver higher returns and lower risk than indices such as the S&P 500.
“By combining our proprietary persistence rating with each fund’s risk-return behavior over time, FundReveal gives investors a rational, fact-based means of gauging future performance potential,” said Anthony DuBon, Vice President, Strategy & Operations. “People often invest in mutual funds based on recent total returns, but many ‘hot’ funds with high recent returns perform poorly in the future. Investors are better off investing based on persistence than chasing past returns.”
FundReveal also provides users with straightforward tables and graphs. The Fund Universe Comparison Graph positions selected funds in the context of risk-return performance for all U.S. funds and the S&P 500 in a visual form that is easy to understand. The Summary Table gives vital statistics on funds, while other tables and graphs show Persistence Ratings and risk-return behavior of funds over time.
Back testing conducted by IRMS demonstrates that a mutual fund portfolio constructed using FundReveal beat the S&P 500 by a significant margin in spite of lower risk. The example portfolio achieved a total gain of 50% over five years from 2005 to 2009, while the S&P 500 lost 5%.
Investors, advisors and asset managers can try FundReveal for free at www.FundReveal.com and receive Web-based summary reports for up to 15 mutual funds. A one-year standard subscription provides reports for up to 400 more funds and costs $200. A one-year premium subscription includes additional reports for up to 1,000 funds and costs $500.
In conjunction with the launch of FundReveal, IRMS has launched the Mutual Fund Performance Forum, a blog dedicated to encouraging clearer measurement standards for mutual funds. The Forum offers investors, institutions and researchers a platform to explore mutual fund metrics in the pursuit of more transparent, accurate and predictive portfolio strategies.
Chitaley and DuBon both served for more than a decade at fund giant Fidelity Investments. Chitaley was a Senior Vice President in the Equity Division and DuBon was a Vice President in the Fixed Income Mutual Fund Division and Enterprise Risk Management. Chitaley earned an Sc.D. from the Massachusetts Institute of Technology. Anthony DuBon holds an A.B. from Harvard College and an M.B.A. from the Yale School of Management.
“No one can guarantee future returns of mutual funds,” according to Chitaley, “but FundReveal gives investors the best intelligence available to pick funds with a high chance of winning in the future.”
About Investment Risk Management Systems Inc.
Investment Risk Management Systems Inc. (IRMS) of Ashland, Mass., has developed FundRevealSM (www.FundReveal.com), an easy-to-use and unique online tool that predicts risk-return behavior of mutual funds. FundReveal uses risk, return and persistence measures to analyze the performance of individual mutual funds and identifies those most likely to succeed.