Orphaned Funds Are Bad for Investors

Morningstar research identifies 3,751 funds with assets under €100 million with no little-to-no flows in five consecutive years

Jonathan Miller 1 May, 2019 | 10:00AM

Pound coins and notes

Funds lying dormant with tiny assets are a disservice to investors. The extent to which these “orphaned funds” are prevalent in Europe comes to the fore in our new research paper. Also dubbed “zombie funds,” Morningstar has run the numbers on funds with a five-year track record, assets under €100 million, plus little-to-no-flows in five consecutive calendar years. The results show that far more needs to be done to weed out these substandard offerings, which are usually saddled with high fees.

Taking mainstream asset classes and removing funds from Morningstar Categories that come under the heading of “other,” we found over 15,000 funds with five-year track records. Breaking that down further shows how we reached our findings that identified 3,751 orphaned funds.

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About Author

Jonathan Miller  is Director of Manager Research, Morningstar UK

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