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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.

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