The date on which the fund began its operations. The inception year is followed by the month. A fund with an inception date of February 1986, for example, would be listed as 1986-02. Funds with long track records offer more history by which investors can assess overall fund performance. However, another important factor to consider is the fund manager and his or her tenure with the fund. Often times a change in fund performance can indicate a change in management.
Benefits
The commencement date indicates when a fund began investing in the market. Many investors prefer funds with longer operating histories. Funds with longer histories have longer track records and can thereby provide investors with a more long-standing picture of their performance. Because of the explosion in the mutual fund industry over the past decade, the fund universe now consists of thousands of investment offerings. Many of these new contenders have very little history by which an investor can hope to gauge their possible performance in various market climates.
Origin
This information is taken directly from the fund’s annual report.
For the Pros
Funds with long track records offer more history by which investors can assess overall fund performance. However, another important factor to consider is the fund manager and his or her tenure with the fund. Often times a change in fund performance can indicate a change in management. Also, some funds may have a very recent commencement date, but are spin-offs from existing portfolios in the form of a new share class. Although the expenses between classes usually differ, it may be useful to consider the track record of the oldest share class (and adjust for expenses).