We last examined changes in the Advisor Perspectives (AP) Universe of Most Popular Mutual Funds in August 2007 and, prior to that, in May 2007.  After twelve weeks of substantial market volatility, we revisit this analysis.  Our goal is to identify significant sentiment – either positive or negative – among RIAs whose clients are HNW and especially UHNW investors.  Our methodology is explained below.  We are offering a similar analysis to that which we offered in August, and in the PDF version we provide complete tables of the 25 funds with the largest current AUM in the full AP Universe, as well as in each of the three tiers based on account size (Largest Accounts, Mid-Sized Accounts, and Smallest Accounts). 

As background, below are the changes across the AP Universe over this 12 week period:

Below are some of the significant changes in the AP Universe:

Funds Exhibiting Significant Gains

PTRAX – PIMCO Total Return Fund

• Moved from 6th to 2nd in the AP Universe; from 6th to 3rd among Largest Accounts; from 7th to 8th among Mid-Sized Accounts; and 22nd to 16th among Smallest Accounts
• AUM grew by 50.0% in the AP Universe
• 112 accounts were added, as well as 9 new advisory firms across the AP Universe
• This fund showed considerable growth, particularly among the largest accounts in the AP universe

EEM – Ishares Trust MSCI EMIF

• Moved from 16th to 10th in the AP Universe and from 12th to 8th among the Largest Accounts
• AUM grew by 48.8% in the AP Universe and by 50.1% among the Largest Accounts
• Usage across accounts exhibited consolidation.  There were 173 fewer accounts holding this fund across the AP universe, but it was used by 8 additional advisory firms.
• This fund showed considerable growth across the Largest Accounts, as well as a consolidation of holdings into larger positions.

MXXIX – Marsico 21st Century Fund

• Moved from 36th to 21st in AP Universe; from 31st to 22nd among the Largest Accounts; and from 57th to 34th among the Mid-Sized Accounts
• AUM grew by 68.6% across the AP Universe
• Fund was added to 169 accounts and by 2 advisors across the AP Universe
• This fund showed considerable growth among the largest accounts in the AP Universe, although the growth included only two new advisory firms

Funds Exhibiting Significant Losses

EWJ – IShares MSCI Japan IN

• Fund went from 9th to 13th across the AP Universe and from 8th to 10th among the Largest Accounts
• AUM dropped by 3.3% across the AP Universe and by 3.3% among the Largest Accounts
• Fund is held in 11 fewer accounts across the AP Universe, and 5 of these were among the Largest Accounts
• Fund is used by 4 fewer advisory firms
• This fund showed considerable defections among existing advisors within the Largest Accounts.  This fund was also among the funds exhibiting significant losses in our previous analysis in August 2007.

SWHEX – Schwab Hedged Equity Fund

• Fund was 22nd but is no longer among the top 500 across the AP Universe; fund went from 22nd to no longer among the top 500 among Largest Accounts; and from 32nd to no longer among the top 500 among Mid-Sized Accounts
• AUM was $48.2 million across the AP universe and is now below $1 million.
• The fund showed considerable defections, but these were representative of a small number of advisory firms

Methodology

We rank funds by the assets under management (AUM) within our universe. A fund's ranking can improve or decline only if its AUM changes relative to other funds. Such changes can be due to any of the following:

• Existing advisors shifting money into/out of existing accounts
• Existing advisors putting money into of new accounts, or closing existing accounts
• New advisors putting money into new accounts
• Gains or losses in AUM due to fund performance
• Funds moving from the mid-sized account tier to the largest account tier, and vice versa

In some cases, funds moved down in ranking, but their AUM increased and the number of advisors utilizing the funds remained constant, as did the number of accounts holding the funds. We do not consider this a significant change in sentiment regarding the fund, which is our guiding criterion in this analysis. We look for situations where one or -more often- more of the following occurred:

• Change in fund ranking
• Change in AUM beyond what would be expected due to fund performance
• Increase or decrease in the number of advisors using the fund
• Increase or decrease in the number of accounts holding the fund

We also eliminate situations where changes in fund usage were due to movements between account tiers. Some subjective judgment comes into play. We do not have a single objective metric or standard that allows us to measure changes in the universe. But we believe that the examples we show above exhibit evidence of changes in advisor/investor sentiment. We are providing the criteria we used to select these funds, so you can be the final judge as to whether the change in advisor/investor sentiment is significant.

Finally, we consolidate holdings across share classes for a given fund.  The ticker symbol displayed is the first symbol, alphabetically, among the various share classes. It may not be representative of the share class or classes held in the AP universe.

To view tables, please see PDF version.

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