A study of mutual funds found new domestic equity funds tend to outperform their more mature peers in the first year of their existence, but the advantage is unevenly distributed across asset classes.
The study, by Kobren Insight Group, found new large-cap and midcap funds on average outperform older funds by 2.1 percentage points in their first year. Small-cap funds outperform older funds by an average of 6.9 percentage points. In year two, large-cap fund performance over older funds dropped 1.4 percentage points. Midcap funds performed even better in their second year, moving up to 3.5 percentage points of outperformance. Small-cap funds dropped to an average of 4.2 percentage points of outperformance in the second year.