Fund Managers Need to be Accesible and Personally Invested
Posted by business | management | Posted on April 23rd, 2010
By: Dominic Mazzone, Managing Partner, Regent Global Funds
We hear it all the time. “Put your money where your mouth is,” “Skin in the game,” and, “Eat your own dog food.” All phrases that talk about the one thing in the investing world that many fund managers try to avoid. Accountability. When you hear the word accountability these days it usually refers to CEO’s that are on their way to jail, or Club Fed as the locals like to call it. Accountability is, however, now starting to creep into the vernacular of investors who wonder whether or not the person that is supposed to be managing their investment believes in it enough to put his own money into it. A recent Morningstar study of approximately 6,000 fund issues showed that 46% of the stock funds reviewed were managed by fund managers with none of their personal money invested in their own funds. Think about that in realistic terms. You have about a 50/50 shot that the person you are trusting to protect and grow your investment doesn’t trust himself to protect and grow his own investment. That is not only a serious problem of accountability, but what about performance? During my formidable years at USC, I took a Business Development class that was being taught by a former Controller of General Motors (I don’t remember his name and it was during the cheap gas good times at GM). He devoted an entire semester to what he felt was the one thing that made people perform at their best. Motivation. Motivation derived from doing well in the eyes of others is a pretty good source, but it’s nothing compared to the personal motivation derived from something like the well being of your own investment account. Some of the arguments we may hear from fund managers are that the types of investments that they manage don’t fit well in their portfolio because of variables like age, risk tolerance, etc. This argument could be made for fund managers in their 30’s and 40’s that don’t invest 30% of their portfolio into the super conservative fixed income fund they are managing like a bond fund, but there is really no excuse for investing zero.
I have seen a few articles on this subject lately and I thought investors would like to hear about this from a fund manager’s perspective. Being a fund manager myself I can tell you that it is personally stressful for me every time we make a decision that will affect the fund and the investor money we are using. I think any fund manager that doesn’t feel this way is either too detached or on prescription medication. Besides the stress of investing someone else’s money, the thought that also goes through my mind like a hammer is how much money I will lose personally if the investment goes bad. This thought is present for the simple reason that I am heavily invested in our fund and any bad decision will affect me personally. I don’t have the option of having a deal go bad, and say “Well Mr. Investor, we’ll try harder for you next time and I am sure glad it wasn’t my own money that was lost.” I think this kind of accountability is the last and most important check in a system of checks and balances that lead a fund manager to a prudent decision.
The other large problem associated with fund managers and their investors is the lack of accessibility to the fund manager. Now I can totally understand how fund managers of large multi-billion dollar funds can’t speak to the multitude of people investing in them. However, I think the comfort level associated with being able to pick up the phone and speak with your fund manager is absolutely irreplaceable. I say this not only so you can ask questions about your investment or get their perspective on the market, but more importantly to get an overall feel of the type of person that is investing your money. So I think we can all agree about the benefits of speaking with your fund manager, but with accessibility there is a flip-side check in the check and balance system. If the fund manager knows you, there is a feeling of personal responsibility that is created, and that responsibility helps create some caution when he is investing your money.
I realize that we live in a virtual world, but some of the age old principles in life need to still apply. Being personally tied to a result creates the motivation for good performance, so make sure your fund manager is personally invested. Lastly, there is still an awful lot you can learn about someone in a five minute conversation. If you have the option, call your fund manager, or prospective fund manager, and talk to him about his investment philosophy and just try to get an overall sense of him/her as a person. The same five minutes wasted while waiting for your computer to boot up, could be five minutes with your fund manager that, in the end, can make or save you an awful lot of money. So stop reading and start calling and find out who is managing your money.
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Total Quality Management (TQM) is a management strategy aimed at embedding awareness of quality in all organizational processes. TQM has been widely used in manufacturing, education, government, and service industries, as well as NASA space and science programs. Total Quality provides an umbrella under which everyone in the organization can strive and create customer satisfaction at continually lower real costs that result in profitability.
The thought that it is continuous must be qualified with a statement that it must be emphasized by management and exercised at all levels to be functional if quality is to improve continuously. Every time I’ve implemented a TQM as CEO I have seen initial gains that were substantial, but to get secondary or tertiary results, the TQM had to be reemphasized and implemented again and again. Some mountains still need to be climbed even when the summit has been reached. There always seems to be a higher peak next door.
Good luck in your quest.
This must be an exam question. Go back to your books first.
so saving the climate will let us survive without having to do major ass adaption, a low carbon economy will create more jobs and help us get out of the recession and we will be leaving a healthier, more intact planet to future generations! is that bad?!
Can I make a small suggestion?
Repeat the last few seconds of your previous videos with the next one…
It’s really hard to figure out what’s going on…Especially when you have to wait for the video to load, and you forgot how the last video ended…
Thanks~
To me, human relations would be the best.
Our purpose is to attempt to change attitudes and instill responsibility for personal actions.
We can achieve these aspects through understanding the human psyche and applying known methodologies, such as cognitive behavioral therapy, within the judicial context.
Both exist in columns and rows, not one or the other.
and yes it is.
I've owned two condos and in both situations the builder selected the management company. Once the association was turned over to the owners, then the home owner's association had the power to hire/fire the management company.
Do you know who your board members are? It's always been my neighbors and we could approach them with concerns. You could also attend the next board meeting.
Good luck.
The columns represents action or inaction.. the rows represent the uncertainty of the debate “Alarmists being right or skeptics being right.”
Essentially Action is buying insurance, inaction opting out of insurance. Global Warming is the reason your making a choice to buy insurance or not..
The economic harm is the cost of the insurance.. The only Jedi Mind Trick is Greg implying that it wouldn’t cost money for insurance.
Yep, most degrees are NOT confined to just one area of careers. With that business degree and depending on the school system, you might be able to teach in some of their schools.
The FMC (also called FMS – Flight Management System in some installations) is generally a remotely mounted computer, located in the avionics bay along with the radio receiver/transmitter units, TCAS, EGPWS, etc. The MCDU is the actual display screen and keyboard that you see in the flight deck. It's just a "dumb" control panel for the FMC. The radios work the same way; controllers/displays in the flight deck, actual radios in the avionics bay.
The FMC sends guidance commands to the flight director, which drives the autopilot.
Pilots monitor progress by viewing information displayed on the multi-function display (MFD). It's usually set to display a moving map that can be configured to show flight plan waypoints, high or low navigation aids, airports, airways, etc.
Films and tv programs represents a true view about the business industries . If you need more information search in a search engine by filling the related options, good luck
you know the earth is warming when people living in the Caribbean start complaining about the heat. and people in new york are actually glad when it gets warmer. record breaking temperatures
Not for nothing but the current growth in GDP is ~2.9% which would mean a total halt in economic growth.. During the Great Depression there was stagnant growth of around 1.7% (3% is $2.7 Trillion)
Also its no Jedi Mind Trick.. the columns represent the certainties… the rows are the variables.. which is why the economic harm is a certainty and global warming is still a variable.
You should know that.
i have something else to add:
is it bad to conserve resources for future generations? even if global warming isn’t real, why should we leave a polluted, resourceless hunk of rock for our kids? climate change is real, (and we have solid, real proof that we are causing it), so we should have some moral and ethical considerations to save the huge amount of species here on earth, BUT we should think about our own KIDS.
I have created a simple, but useful page, which has all the links to this series of videos listed in the correct order.
The site name is of the standard format with the usual (US) extension after the dot. The site name is then followed by a forward slash and the name of the page, so the first word is my site name and the second bit is the page name (but you need to put D O T h t m on the end).
pharmgateway howitallends
Because management can be so full of themselves and forget why they are in that position. Sooner or later power goes into people's head and they forget what the business is about. For example, it is really easy for someone sitting in the headquarter of McDonald's to forget life of minimum wage people in front of a grill.
Management should periodically look at the business from various perspective, and if they still decide to keep same old way of doing business at least it is an informed decision.
Best wishes.
answer this question
he outright says it would. did you watch the video?