Not All Premium Funds Are Alike

In 2017, 27 funds launched in Europe with “premia” in their name - but what does it mean in practice?

Matias Möttölä, CFA 23 May, 2018 | 12:41PM
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The world of investing is driven by buzz words. Currently, one of the hottest labels is “premium” or “premia”. In 2017, 27 funds launched in Europe with “Premia” in their name. Another two have come out of the gates in 2018 by April 25, and more will surely be launched."Premia” even surpassed the popularity of "factor", another concept from the world of finance theory – there were 17 funds launched with "factor" in their name in Europe last year.

The notion of premia is taught in finance theory classes and is used most widely to describe the expected return of different investments. Premia are typically estimated as a combination of historical returns and current economic conditions, valuations, and instrument-specific technical attributes.

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Matias Möttölä, CFA

Matias Möttölä, CFA  is a fund analyst and editor of Morningstar.fi.

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