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AK In The News: How Federated Turned Its Flows Around: ‘Consistency’

I was asked to comment on an article in 929.com (a new on-line website geared toward portfolio managers) based on comments made by the CEO of Federated Investors, where he credited the consistency of the performance of many of their funds as the reason that they have seen a turnaround in flows from negative to positive.

Is ‘consistency’ the new buzz word? While it may not be the only driver of fund flows, I do believe that many investors are looking for the safety that consistent, steady returns promise. To quote from the article: “Fund industry consultant Andy Klausner adds that wirehouses and other distributors find the promise of modest but consistently positive returns appealing because investors are still skittish about the markets.

“Nobody wants hot money,” he insists. “Everyone wants longterm investors, and the best way to attract longterm investors is to outperform in a slow and steady manner.””

Transparency still matters, but in the wake of the financial crisis so many firms have addressed this issue head on that has now become the norm – the expected – rather than the exception. Again, quoting from the article:

“While it’s true that transparency is important to financial advisors, it is so common that most FAs take it for granted, says Klausner. “So when a firm like Federated makes announcements about performance, it makes sense to focus on something like consistency – something that really resonates.””

Especially now with the long expected normal bull market correction still somewhere over the horizon, not losing money becomes as important as making money.

What are your thoughts?