Investors typically tread carefully with new funds. Better to wait for the managers to prove themselves for a couple of years, or so the thinking goes.
Yet some funds manage to buck the trend by amassing a significant amount of assets well before their three-year anniversary. It may be because they have a unique strategy, low costs or a rock-star manager. The highly anticipated exchange-traded version of Pacific Investment Management Co.'s flagship $270 billion Pimco Total Return (PTTRX) bond fund, led by Bill Gross, is a good example, having attracted $2.5 billion in assets since its launch in March.
"It needs a lot of buzz" for a fund to take off like that, says Jeff Tjornehoj, a senior analyst for fund researcher Lipper, a unit of Thomson Reuters Corp.
Not many of the mutual funds and exchange-traded funds launched last year had quite as much sizzle. But several from the class of 2011 have attracted close to $1 billion in assets already -- or surpassed that.
Here's a look at some of them:
American Funds Global Balanced (gblax)
- Started Operation: Feb. 2, 2011
- Recent Assets: $3.2 billion
PowerShares S&P 500 Low Volatility (SPLV)
- Started Operation: May 5, 2011
- Recent Assets: $2.4 billion
That strategy also leads the fund to focus on defensive sectors such as consumer staples and health care, which have been relatively strong performers this year, according to Todd Rosenbluth, a fund analyst for S&P Capital IQ. The fund produced an 18% return over the year through August, matching the S&P 500.
iShares High Dividend Equity (HDV)
- Started Operation: March 29, 2011
- Recent Assets: $2.1 billion
John Hancock Global Absolute Return Strategies (JHAAX)
- Started Operation: Dec. 16, 2011
- Recent Assets: $958 million
The "go anywhere" mandate of this fund allows managers to switch between stocks and bonds from anywhere in the world, while using derivatives to make plays on other asset classes, like currencies. Investors are increasingly turning to tactical funds, hoping the flexibility will help them minimize losses during rocky markets. This fund is in the top 30% of Morningstar's multialternative category this year. Still, the S&P 500 has returned more than double the fund's 5.9% gain so far this year.
Pimco Senior Floating Rate (PSRZX)
- Started Operation: April 29, 2011
- Recent Assets: $901 million
Floating-rate funds have an "allure" for investors trying to beat the record-low yields on government bonds, while shielding themselves from rising interest rates, says Eric Jacobson, director of fixed-income research for Morningstar. These funds boost their yields by investing in loans made to risky companies, but they limit their interest-rate risk because the loans carry adjustable rates.
This fund has returned 4.5% this year, beating the 3.9% return of the broad Barclays Aggregate Bond Total Return Index. The $841 million JPMorgan Floating Rate Income (JPHAX) and $724 million Goldman Sachs High Yield Floating Rate (GFRAX), also launched in 2011, are also attracting attention.
- Started Operation: May 31, 2011
- Recent Assets: $717 million
—Ms. Marte is a reporter for SmartMoney.com. Email her at firstname.lastname@example.org.