Investors wondering why their mutual funds can't beat the market should talk to the chief executives of some of the largest mutual fund companies.
Bluntly put, it's stupid managers.
That was the not-so-sugar-coated message three industry leaders gave at the closing session of the
Investment Company Institute's
annual meeting in Washington, D.C.
Lawrence J. Lasser, chief executive of
, said he was increasingly noticing some fund companies showing up near the top of performance sweepstakes and others consistently lurking in the basement.
Pointing to the sheer number of about 8,500 mutual funds available to investors today, Lasser said, "it's unimaginable to me that there are 8,500 competent investment managers out in the world. The
performance results would suggest I'm right."
Bridget A. Macaskill, chief executive of
, seconded Lasser's notion to an even stronger degree.
Said Macaskill, "I think this industry is incredibly short of talented people," among not only portfolio managers but also the management of the fund companies themselves.
Pointing to the fact that most people in the fund industry move through a career track in one certain area -- say portfolio management or sales -- most are too narrowly focused by the time they get to senior levels that they can't see the big picture.
"This industry has not grown enough general managers, and that's the new talent gap," Macaskill said. "I spend a huge amount of my time trying to retain, attract, recruit and motivate people."
Bob Pozen, president and chief executive of
, the nation's largest mutual fund company, has blamed hedge funds in the past for stealing talent from the mutual fund industry. He gave a here-here to Macaskill's point. But he also said the level of talent that does exist in the industry was one of the reasons mutual fund companies are challenged as well.
"I like to say the best analogy for my job is being the coach for the
," Pozen said. "Because you're dealing with that very highly talented, very highly compensated group of people who really are your senior management. It's a very delicate personnel management issue."
For the sake of Fidelity's shareholders and the rest of the mutual fund industry, let's hope Pozen and his peers can do better than Boston's beloved basketball team this year. The Celtics ended the season with 19 wins and 31 losses. So much for high-priced talent.