Top-Performing Funds with Managers Who Lack Ownership

When it comes to investing in mutual funds, one key factor to consider is whether the portfolio managers themselves have a stake in the funds they manage. This signals their belief in the fund’s long-term prospects and can provide investors with added confidence in the fund’s performance. However, not all top-performing funds have managers who invest in their own funds, which can leave investors scratching their heads.

Let’s take a look at four funds that have historically performed well but lack manager ownership. The Western Asset Core Plus Bond WACPX and Western Asset Core Bond WATFX funds, for example, have five experienced managers but none of them are invested in the funds. Despite their impressive track record and Morningstar Medalist Ratings of Bronze, it is surprising that none of the managers have chosen to invest in these funds, even the longest-tenured manager.

Similarly, the Loomis Sayles Strategic Income NEFZX fund, managed by Matthew Eagan and Brian Kennedy, also lacks manager ownership. Despite the fund’s strong performance and the managers’ proven track record, they have chosen to invest in other funds they manage instead. This raises questions about their level of commitment to the fund and may leave investors wondering why they have not put their money where their mouth is.

Lastly, the Harbor Small Cap Value HASCX fund, managed by Paul Viera, has seen impressive returns since its inception in 2001. However, Viera, the lone portfolio manager, does not have ownership in the fund, and it is unclear if the rest of the investment team does either. This lack of ownership from the manager raises concerns about their alignment with investors’ interests and their confidence in the fund’s future performance.

While manager ownership is not the sole indicator of a fund’s success, it can provide investors with added reassurance about the fund’s long-term prospects. Seeing managers invest in their own funds can signal their commitment to delivering strong returns and can help build trust with investors. As you consider investing in mutual funds, be sure to take into account whether the managers have a stake in the funds they manage, as this can be a valuable factor to consider when making investment decisions.