Little Known Secret of Fund Managers

What’s the Little Known Secret that many mutual fund managers wish you didn’t know? You won’t believe it when I tell you. Many mutual fund managers do not invest in their own funds. Kind of unbelievable, isn’t it!

Investment News, a trade publication that guys like me read at the breakfast table, recently ran an article about a new Morningstar study.(Morningstar is a company that tracks and rates mutual funds.)

According to Investment News, the Morningstar study foundthat only about 40% of fund managers actually invest in their own funds.

Would you like to know what percent of mutual fund managers had ownership stakes in the study Morningstar conducted two years ago? It was 49%. Not exactly going in the right direction.

Talk about lack of conviction! These funds are spending millions of dollars in advertising trying to get you to buy their funds, and their own managers won’t even buy them. Sad, but certainly not surprising.

Maybe these fund managers are finally getting it. Maybe they realize the folly of their efforts in stock picking and market timing trying to beat the market. Just maybe they are investing in highly diversified, low cost portfolios, a academic approach.

By the way, I can assure you that my wife and I use the exact same investment strategies and have our personal moneys invested inexactly the same way that I recommend to my clients – 100% of the time.

And do my child reinvest the same way? Absolutely.

How about other family members? Definitely

Here’s a short video featuring Don Phillips, the President of Fund Research at Morningstar, talking about this issue.

About Paul Nichols

Paul is the founder of Financial Abundance, a Registered Investor Advisory firm and EDI, an Estate Planning Firm with offices in State College and Lewisburg. He has been working with individuals, families and businesses for over twenty years, including many Fortune 500 companies. He has educated tens of thousands of people through seminars, workshops and various international speaking engagements where he shared the stage with many notable individuals such as Ronald Reagan, Robert Kiyosaki (author of Rich Dad, Poor Dad), Mike Ditka, General Schwarzkopf, and Newt Gingrich to name a few.

In 2000, after many years of traveling to consult companies and individuals, Paul decided to relocate from Colorado to State College, PA (his wife’s hometown) to develop a local advisory firm.

Paul operates under the core belief that education plus understanding leads to clarity and confidence; resulting in peace of mind. He is a proud father of three and devoted husband of 20 plus years.

Some of Paul’s accomplishments:
Regular contributor to the Centre Daily Times, via the “It’s Your Money” blog
Featured in the movie Navigating the Fog of Investing
Regular contributor to Town & Gown as the publications Investor Coach
Host of the weekly iTunes Podcast, It’s Your Money
Member of the Western PA Better Business Bureau
Member of the Centre County Chamber of Business and Industry