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Playing Chicken with Investors -- Part Two

How one fund took shareholders on a wild ride.

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This is the second in a two-part series exploring the unusual circumstances that precipitated the liquidation of the Chicken Little Growth Fund. Click here to read the first part of the story.

Rise of the Outsourcers
Incidents like the Chicken Little story, while highly unusual, loom larger when one considers the burgeoning trend toward back-office outsourcing. Indeed, the growth of turnkey providers reflects the changing state of the back office, which, while perhaps once regarded as a boring, but compulsory, backwater in the investment-management business, has jumped to the fore in recent years amid heightened complexity and regulatory scrutiny. In short, managing a client-responsive, rules-compliant back office costs more and demands greater expertise than ever before. Thus, advisors lacking the resources or commitment have found it easier to buy than build, explaining the flight toward full-service third-party providers.

Jeffrey Ptak does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.