To keep talented and honest people, mutual fund firms would be best advised to adopt a sort of "corporate culture," a Morningstar analyst attests.

Russel Kinnel, the company's director of mutual fund research, recalled the good deed of a Vanguard manager, who, against the request of an investor, refused to allow a $1 million market-timing transaction. Jack Bogle, then company president, was pleased that without even having to consult the Vanguard hierarchy, the manager did the right thing, which was to put the well-being of all shareholders first.

Kinnel reports that the corporate culture at American Funds is also remarkable, considering the low turnover rate amid an almost never changing portfolio. In fact, the company has opened only one new fund in the past 10 years.

But companies like Credit Suisse First Boston and Dreyfus have suffered alarming personnel turnover rates, according to Morningstar, and the funds have suffered average-at-best results as a result.

Other companies fall somewhere in the middle. Kinnel uses the example of Merrill Lynch, which is slowly creeping back up the stairwell of corporate culture thanks to former OppenheimerFunds veteran Bob Doll and his committment to corporate cleanliness.

Grading firms on corporate culture has become easier during the scandal, Kinnel says, as companies that put the idea of profits ahead of the welfare of investors have stuck out in the crowd and firms with "investor first" mentalities have continued to prosper.

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