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Fund Spy

These Fund Managers Are True Believers

Some managers went the extra distance and committed more than $1 million to their niche funds.

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In past tests, I’ve found manager ownership to be the second-best predictor of outperformance after fees. (If someone tells you fees aren’t important, they are selling something.) It’s frustrating that the SEC requires only that fund ownership be reported in ranges that top out at a $1 million, however. The typical manager of a large actively managed fund is likely making seven figures, and many are making eight figures. So, a $1 million investment is a good sign that managers are eating their own cooking, but we don’t know if it’s an appetizer or a main course.

Russel Kinnel has a position in the following securities mentioned above: NEWFX, FFRHX, DODLX. Find out about Morningstar’s editorial policies.