TCF cites data from a 2009 survey by the Investment Management Association, which suggests there has been so much “churn” in the fund industry that a lot of performance data is of little use. For instance, the IMA report said that a total of 2,507 funds were launched in the past 11 years; a total of 2,400 funds were closed – in some cases through mergers with other funds. The total number of funds in existence at the end of 2009 was 2, 524 – up from 2, 437 in 1999.

The data will also add to the belief that fund managers are more interested in pushing out “new fad” products to capture flavour-of-the-moment investment ideas rather than in achieving long-term, sustainable performance.

Although many of these funds apply to the retail market, the relevance to the wealth management industry is obvious. How many times has your correspondent heard it said that there is too much “product push” in the wealth management industry, with excessive focus in shoving out fancy new products to the shop window, and not enough time spent on helping the client?

I think we should not become too pious about all this, however, because the investment industry sometimes has good reasons for wanting to try out new products based on new ideas, philosophies and market opportunities. There is a great deal of entrepreneurial inventiveness and creativity in this sector which should be celebrated, not attacked.

But the European fund industry is still notable for a bewildering variety of new funds and a heavy amount of “churn”, encouraging investors to focus on a short-term past track record rather than one over a longer period of time. Recently, research from Lipper FMI showed that investors prefer to pump new money into funds based on the strength of their one-year track records rather than over a longer time frame. It found that in 85 per cent of the time periods assessed, first quartile funds achieved the greatest net sales based on one-year performance. No wonder funds don’t have a long shelf life.

As TCF argues, the industry has effectively had 100 per cent turnover of funds over an eleven year period. In other words, over a decade, almost one fund has been launched and one fund closed or merged every working day.

The benefits to the end-investor are unclear, since TCF points out that the costs of rolling out and retiring all these funds probably runs into the hundreds of millions of pounds in legal, tax and consultancy fees.

“But the most frightening impact is on performance tables: it seems a reasonable assumption that the funds being closed or merged are the poor performers. This level of activity means that about half of the funds in any 5 year period are merged or closed – and that means their track records have been hidden too (as they are no longer in the performance league tables),” says TCF.

To quote senior TCF manager David Norman: “Anyone looking at 5-year sector average performance is only looking at half the story – the good half. There will be lots of investors wondering why their portfolios never seem to do as well as the leagues tables suggest they should – well now they know why – even past performance tables are not an accurate guide to past performance”

As I said, there is nothing inherently wrong with a lot of new products or retirement of existing ones, but the sheer turnover in this industry is bound to fuel cynicism that investors are not always being well served. Considering that the financial services business needs to rebuild trust, a little less faddishness, and more focus on the long term, would be a good thing.