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Fund Spy

Managers Who Have Bought Their Own Lagging Funds

Here are three out-of-favor funds in which manager investment has increased in recent years.

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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  Fidelity China Region (FHKCX), which has a Morningstar Analyst Rating of Neutral. Manager Bobby Bao's ownership in the fund dropped from the $100,000-$500,000 range at the end of 2016 to nothing at the end of 2017, just before he announced plans to step off.

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Dan Culloton does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.