Your Fund Manager Have Skin in the Game?

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. ...