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Fund Spy

Do ETF Managers Eat Their Own Cooking?

Few exchange-traded fund managers own any of the funds they manage.

Exchange-traded fund families urge you to join the ETF revolution, but many of the people managing their own funds are sitting the uprising out.

I recently looked at the regulatory filings of some of the largest and fastest-growing ETF families to see how ETF managers are compensated and if they are investing any of their own money in the funds their employers are hawking so aggressively. This information can help investors figure out how much ETF managers really believe in the funds they run.

The result was disappointing. For most of the funds I checked, few of the managers had anything more than a token amount invested in the ETFs they ran, according to their funds' most recent disclosures with the Securities and Exchange Commission. The managers of Barclays Global Investors' iShares and State Street Global Advisors' streetTracks and SPDR ETFs had no money in their funds as of their most recent disclosure, while managers at Vanguard and PowerShares had at least some money invested alongside their shareholders. Of those firms, only Vanguard linked manager bonuses to the performance of funds they ran.