Mutual Fund Investors Say Stability More Important than Performance

Reflecting investors deep concerns about the volatile markets, fund performance is no longer the main driver of mutual fund company loyalty, according to a study from Cogent Research.

Today, perceptions of the financial stability of a mutual fund company and its breadth of offerings are now the primary driver of investor loyalty, said a release from Cogent about its Investor Brandscape 2009 report about the attitudes and behaviors of affluent and high-net-worth investors.

Cogent found that combined perceptions of a firm’s financial stability and range of products is a more significant driver of customer loyalty than perceptions about short- and mid-term performance, as well as consistency of investment performance, according to the release.

“Everyone understands investors want and expect to see strong investment performance. That’s a given,” said Antonio Ferreira, managing director of Cogent’s Wealth Management Group, in the release. “But in a broad market decline and in such uncertain times, investors are obviously looking for a safe harbor. Frankly, they want assurance that companies they invest with today will still be here tomorrow. And when they find a partner they trust, investors want enough options within a fund family to suit more of their changing investment needs.”

Score Board

The Cogent Research study computed the net promoter scores (NPS) for 38 leading mutual fund companies. The NPS subtracts the percentage of a firm’s “detractors’ from its “promoters,’ Cogent said, in order to produce a net result score. Firms that received the highest ratings from investors on perceived financial stability and product offerings also have the highest NPS.

The overall average NPS for all mutual fund companies included in the study is -29, which means, on average, mutual fund companies have more “detractors” than “promoters.” An 84-point spread exists among firms, ranging from Vanguard which receives the highest positive score of +21 to Calamos, which receives the lowest negative score at -63.

“It’s rather stunning to see that nine out of 10 fund companies have more customers at risk of defecting than remaining loyal,” said Ferreira. “ In times like these, where positive investment performance is difficult, firms must provide or promote other offerings that address the existing mood of the market—thus, smaller or boutique firms with limited options will have a tough time maintaining loyalty due to lack of product or service breadth.”

The top performers across all 38 firms in terms of customer loyalty—those Cogent designates as “Stars”— are Vanguard, Fidelity Advisor Funds, and Fidelity Investments (with NPS Scores of 21, 7, and 6, respectively), according to Cogent. These three firms are the only mutual fund companies to garner positive NPS scores. The bottom performers across all firms—those Cogent designates as “Drifters”—are Calamos Funds, DWS Investments, and MFS Investment Management (with NPS Scores of -63, -62, and -59 respectively).

The rankings are as follows:


1. Vanguard Group
2. Fidelity Advisor Funds
3. Fidelity Investments


4. T. Rowe Price
5. American Funds
6. Franklin Templeton Funds
7. Schwab/Laudus Funds
8. Dodge & Cox Funds
9. RiverSource (formerly American Express Funds)
10. ING Funds
11. Morgan Stanley Investment Advisors Funds
12. JPMorgan Funds
13. Davis Funds
14. American Century Funds
15. Principal Financial
16. Wells Fargo Funds
17. Lord Abbett Funds
18. Janus Funds
19. Columbia Management Funds


20. Evergreen Investments
21. Dreyfus Funds
22. Oakmark Funds
23. PIMCO Funds
24. OppenheimerFunds
25. AllianceBernstein Funds
26. John Hancock Funds
27. The Hartford
28. Van Kampen
29. Legg Mason Funds
30. Neuberger Berman


31. BlackRock Funds
32. Goldman Sachs Funds
33. Eaton Vance Funds
34. Invesco Aim Funds
35. Putnam Investments
36. MFS Investment Management
37. DWS Investments (formerly DWS Scudder Funds)
38. Calamos Funds