Financial Advisor Forum
Your Fund Manager Have Skin in the Game?
Joanna Ossinger
06/16/08 - 04:33 PM EDT
A new Morningstar study shows that many fund managers aren't invested in their own products.
Writing in the June issue of the FundInvestor newsletter, Morningstar Director of Fund Research Russel Kinnel says that a full 46% of U.S. stock funds have no manager ownership in the fund. He reports that there's no manager ownership by 59% of foreign-stock funds, 65% of taxable-bond funds, 70% of balanced funds and 79% of muni-bond funds.
Note: These figures were revised by Morningstar after the report's initial release. The numbers have been corrected per Morningstar's revised data.
Kinnel says, "There are only two good excuses for not owning a fund you run: first, if someone is managing a single-state muni-bond fund and doesn't live in that state, that person won't benefit from the tax breaks; second, foreign managers of foreign-stock funds sometimes are barred from owning U.S.-domiciled funds.
The article lists funds in which all managers invest more than $1 million. There are 32 such funds in all, including Bogle Small Cap Growth(BOGLX), Davis New York Venture(NYVTX), Oakmark Select(OAKLX), Oppenheimer Global(OPPAX), T. Rowe Price Equity Income(PRFDX) and Vanguard Wellington(VWELX).
"When you pick the funds, I'd go with the highest sum by any of the managers," Kinnel says. "I'm looking for that seal of approval and I'd be wary when it isn't there."
More information about specific funds can be found on Morningstar's Web site.