Sunday, October 31, 2010

Does Your Mutual Fund Manager or Financial Advisor Invest Alongside You?

Morningstar believes that money managers should "eat their own cooking." They call it, "The Cooking Test." In other words, how much money does the typical mutual fund manager have invested in the fund they manage?

Answer: Not much.

Here are the shocking stats from Morningstar and Lipper:

-Average mutual fund manager age: 24

-Average mutual fund manager tenure on a fund: 4 years

-Number of complete economic cycles experienced while managing: 0.2

-Managers with at least $100,000 invested in their fund: Less than 20%

-Managers with over $1,000,000 invested in the fund they manage: 3%


In an investing world full of "look alike" investment options, Ponzi schemes and two 48% stock market declines in the past decade, the only way to invest is right alongside an experienced professional who has significant "skin in the game." With 26 years of experience, I have over $1.5 million invested in the no load mutual fund that I manage. Believe me, I pay pretty close attention to how "our" money is invested!

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