In many ways, asset management as an industry is friendlier to boutiques than many industries. And yet it can still suck to be small. A new report from Alastair Sewell
of Fitch Ratings
draws attention to the recent pain of running a small junk bond fund.
| Alastair Sewell|
Fitch's report, highlighted
, discusses high yield bond fund flows in Europe and the U.S. in December and January. Those were particularly tough months for the category, in the wake of the collapse of the Third Avenue Focused Credit Fund
. And smaller funds on both sides of the Atlantic often suffered bigger outflows as a percentage of AUM than their larger brethren.
As to why investors punish smaller high yield bond funds more than bigger funds, Fitch wonders if smaller funds "are more likely to have a niche investment strategy or to focus on lower-quality securities than larger funds."
Smaller funds are also more likely to be disproportionately impacted by a few large investors' moves; someone withdrawing $1 million matters a whole lot more to a $100-million fund than to a $10-billion fund. And they're less likely to be supported by big relationship management, marketing, and sales forces to help stem the tide in the tough times.
In other high yield fund news, Barron's also reports
on new data from S&P Capital IQ
on such funds' recent returns.
Neil Anderson, Managing Editor
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