Although there have been reports suggesting that funds where the portfolio manager has some of their own money invested might have both an incentive and proof to outperform their peers, a new study underscores that even more compellingly, The Wall Street Journal reports.
The study, conducted by researchers at the Georgia Institute of Technology and the London Business School, looked at 1,300 mutual funds. They separated the funds where the manager owned at least some shares in 2004, and found that they delivered 8.7% in 2005, compared to 6.2% by the funds where managers held no shares.
Nonetheless, fewer than 50% of fund managers have their own money tied up in the portfolios they run.
And fund companies are increasingly encouraging the practice. At
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