Teams boost mutual fund returns

Teams funds require consensus and debate.

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From the April 2014 issue of the magazine.

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football_moneyInvestors looking for a little extra octane in their investing gas tank might consider mutual funds with multiple managers. That’s because they outperform single-manager funds, says a study by Saurin Patel of Western University and Sergei Sarkissian of McGill University. Using U.S. mutual fund data from Morningstar, they found the team approach reduces aggressive trading and lowers turnover rates by 5.5%, reducing trading costs and boosting investor returns. Another notable finding showed managed teams in big cities gain on average 60 to 72 basis points more per year than single-manager funds in smaller cities, suggesting access to more financial information improves performance.

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