Advertise with Us

Bookmark and Share

Mutual Fund Managers – Do They Really Have Your Interest

If you invest money into a mutual fund, your money will be taken and used, along with the money of all of the other investors, to purchase stocks and securities which are likely to appreciate in value, thus netting you a profit. This is of course a simplified and somewhat idealistic view of mutual funds, but on the whole, it is an accurate description of the basic premise.

Do You Know Who Is Looking After Your Investment?

But who decides where the money is invested and ensures that the value of the mutual fund continues to increase? This function is performed by the mutual fund managers. These are people who are paid by the corporation or trust managing the mutual fund to ensure that the fund is operating with a consistently increasing rate of profit by investing the fund wisely throughout the global market and ensuring that there is a constant flow of new investors contributing fresh capital to the fund.

This essentially means that once you have signed your money over to one of the many mutual funds now operating around the world, it will be taken and distributed according to the decisions made by a small group of people in a boardroom. Consequently, the decision to invest must be accompanied by a large amount of trust in the expertise and professionalism of these people.

Should I Trust My Mutual Fund Manager?

If these people are all trustworthy individuals, which, in an ideal world, they all of course would be, then one would have nothing to worry about when investing in their trust, however it is always possible that your mutual fund managers do not have your best interests at heart and are essentially using your capital to further their own profits rather than allowing these to filter down into your pocket.

An investing mutual fund could one day fall flat on its face, leaving the investors with nothing but a large depreciation in their net worth, yet one would likely still read news headlines detailing the large payoffs given to the recently fired mutual fund managers. Investors will sometimes be able to get their money back if the fund receives a government bail out, but those in charge of the mutual fund will always ensure they have an adequate, and often sizeable, safety net in case of such an eventuality.

I do not believe that mutual fund managers have our interests at heart – if they really did then they would probably not be as good at their jobs. The world of finance works on the premise of squeezing the maximum amount of profit from ones investment, and this is not a premise which always provides room for sentimental morality. If you sign your money over to an investing mutual fund then you are placing a portion of your own financial stability under the control of someone you do not know very well, if at all, and it is important to know that this person may not have your best interests at heart.

Mutual Fund Managers Are People Too

Investing in mutual funds means that mutual fund managers are being provided with the means to make a profit which is generated using other people's money. These people are able to share in the profitability of their chosen fund, but it is those at the top who reap the greatest rewards. You will benefit, but it is largely at the whim of those in charge.

I am not telling you not to invest in mutual funds because those in charge of them are all selfish and hard nosed financial cut throats, but it is important to remain aware that at the end of the day, the entity controlling your invested capital is just another human being, susceptible to the same basic human weaknesses as all of us, one just has to trust that their capacity for greed is going to work in your favour.