Their managers don’t
There are pros and cons to investing in mutual funds. When it comes to just wanting to own “stocks” then an index fund from a high quality low cost provider does make sense. The fact that you cannot control capital gains will make less of a difference in 2011, or maybe 2010 considering the idiots in Congress, when the favorable treatment of capital gains is removed.
Gary D. Halbert brought to my attention this week that Morningstar reported that not only do many mutual fund manager not invest in their own funds but that the percentage that did invest in their funds has DECREASED in the last year and a half.
There is no legal requirement that a fund manager invest in his own fund, but if they don’t, what does that tell you? Sort of like a Sprint executive carrying a Verizon phone, isn’t it?
I have reported long ago my experience doing tax returns for some stock brokers years ago and finding that none of them had significant money in any investment product they sold, despite high incomes. The few that had any stocks at all were usually in a “flyer” that someone gave them an “inside tip” on.
How much would it really pain a fund manager, with salary and bonus in the high 6 figures at worst, to invest $50,000 to $100,000 in his/her own fund just so he can have SOME idea how his customers feel?
Well, I think it’s shameful.
What do you think?
