Little Known Secret that many mutual fund managers wish you didn't know?

Posted by Paul Nichols and Deb Seaward - Investor Coaches on August 1, 2011 

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 found that 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 such as the ones we recommend.

 

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

 

 And do my children invest 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.

 

http://link.brightcove.com/services/player/bcpid1079049310?bctid=985544820001

  

  

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R. Paul Nichols

 

Financial Abundance, Inc.

 

(814) 867-5745

 

(814) 867-5747 Fax

 

pauln@financialabundanceinc.com 

 

www.financialabundanceinc.com 

 

  

 

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