Last week we posed a question: do funds get better with age? 

We recently checked in with the team at Arbuthnot Latham, who gave us a rundown of what they are invested in right now, and why. 

Fund research manager Harry Havelock-Allan said there were pros and cons to each approach: young, new funds may offer discounts, but there’s a risk of managers being distracted by asset gathering efforts. 

Once established, Havelock-Allan says these funds benefit from a ‘survivorship bias’ that skews perception.

“The benefits of longevity and survivorship bring brand familiarity – useful for both attracting investors and talent as familiarity bias is observed – and a longer track record for performance analysis, which is a key requirement for many investors,” he said. 

In that sense, if you can make it out of the first year then success may become self-perpetuating. 

And for Arbuthnot, the sweet spot of a fund’s lifespan would be when it’s approaching its five-year track record. 

“Early business risks can be avoided and the ability of the fund manager can be robustly analysed over a market cycle,” he said. “Assets are unlikely – except in very commercially successful cases – to be too big to manage as the franchise enters its mature phase.”

To get there, however, young funds must scurry like newborn turtles to the ocean, avoiding the pitfalls of the early years, such as breaking even barriers. 

Not having a familiar and reliable brand in a competitive market only makes these challenges harder, he added.