Managers Who Have Bought Their Own Lagging Funds

It can be profitable to invest like a contrarian, but it is very difficult to follow that path. Morningstar research has shown that fund investors must be willing to endure often prolonged bouts of underperformance to realize long-term outperformance. It's easier said than done, but one way to embolden oneself to hang on to or even add to a fund that has been stuck in a fallow period is to look at what the strategy's managers are doing with their money. Buying can be a good sign, and selling a warning flag.

Take

Here are three funds with lagging recent records in which key managers have increased their investments. A variety of factors can explain the increased stakes, including the awards of deferred compensation plans finally vesting and simple market appreciation; so it's not clear that every case illustrates a manager writing an actual check to the fund. Still, increasing manager investment in a fund is a good sign that shows confidence and conviction in the process and further aligns him or her with shareholders.

The managers at BBH Global Core Select BBGNX, a five-year-old offshoot of Silver-rated

Nevertheless, the managers continue to show faith in their process, which gets a Positive rating at BBH Core Select, where long-term results remain strong. (BBH Global Core Select is unrated but has been a member of the Morningstar Prospects list of promising strategies since 2015's third quarter). Tim Hartch, who is also lead manager of and has more than $1 million invested in BBH Core Select, had nothing in the global version of the strategy in March 2015, but by February 2016 he had raised his stake to more than $1 million. The investment of his BBH Global Core Select comanager Regina Lombardi also increased from between $100,000 and $500,000 in 2015 and 2016 to between $500,000 and $1 million as of the most recent disclosure in 2017.

Comanager Deborah Turner's stake in

Increased manager ownership does not guarantee that the fortunes of these out-of-favor funds will turn. There are many other data points and attributes to consider. But it at least indicates the managers are willing to share their investors' discomfort and remain confident in the strategy they're asking shareholders to support.