How do I find out how much money a mutual fund manager has in his or her fund?

By Andrew Beattie AAA
A:

It's natural for investors in a mutual fund to want to know how much the fund's management has invested in it. After all, they should have some of their own money in the fund if they expect you to pour in your hard-earned cash. Surprisingly, the mutual fund industry sees the disclosure of management ownership as superfluous. That's why you won't find the information in the prospectus mailed out to investors. This and other disclosures have been shunted to the Statement of Additional Information (SAI) - presumably to save space for glossy photos and full-page pie charts.

You have to request the S.A.I. from your fund company, but inside you'll find at least the partial answers you seek. The percentage of management ownership will be listed, but usually no names will be assigned to specific amounts. The exception would be if a manager owned a 5% stake, in which case he or she would be required to disclose that information. Unfortunately, mutual funds are so large that a 5% stake requires hundreds of millions, so its rare for a fund manager to qualify.

While you have the S.A.I., you can also look up handy information like the fund's history (was it ever a fund with a different name?), how performance data is calculated, and who controls the votes for voting securities.

The question that follows once you figure out how much the management owns is: "what does it mean?" This is a personal question, but most people would agree that it's a good sign for the fund manager to have a stake in the fund, thus providing an extra incentive to create shareholder value.

Read Digging Deeper: The Mutual Fund Prospectus to find out how to sidestep the legal jargon and find what really matters.

This question was answered by Andrew Beattie.

RELATED FAQS

  1. What is the difference between a REIT and a real estate fund?

    A real estate fund invests in securities offered by public real estate properties directly or indirectly through Real Estate ...
  2. Can you invest in hedge funds?

    Read about what it takes to invest in a hedge fund, and learn how some investors find ways to indirectly capture a hedge ...
  3. What is standard deviation used for in mutual funds?

    See how standard deviation is helpful in evaluating a mutual fund's performance. Use it in combination with other measurements ...
  4. What are typical trust fund management fees?

    Learn about trust fund management fees, such as the annual management fee, annual expense ratio, brokerage commissions and ...
RELATED TERMS
  1. Historic Pricing

    A method for calculating the value of an asset using the last ...
  2. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  3. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  4. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  5. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
  6. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...

You May Also Like

Related Articles
  1. Stock Analysis

    Time to Look at PIMCO's Total Return ...

  2. Economics

    Gary Gordon Positions Your Portfolio ...

  3. Professionals

    A Look At Pimco's Total Return Fund ...

  4. Professionals

    10 Equity Mutual Fund Bargains

  5. Mutual Funds & ETFs

    Destination Africa: These Funds Offer ...

Trading Center