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Fund Spy

Five Years Later: Fund Managers and Cash Stakes

They provide cushions in downturns but don't come for free.

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In a Fund Spy column published five years ago, I asked readers if fund managers should have the flexibility to raise meaningful cash stakes if they were having trouble finding stocks they wanted to own at their current prices or if they felt uncomfortable with overall market levels or economic conditions.

That column appeared in response to the climate at that time. Stock markets around the world had been plummeting more or less steadily for almost a year and a half, and gloom was widespread. It was early February 2009, just five weeks before the lowest point of the brutal bear market caused by the global financial meltdown, and frustrated investors were voicing their dismay about fund managers who had remained fully invested, riding the decline all the way down, rather than protecting them by raising cash.

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

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