The Managed Fund Merry-Go-Round

This months e-mail contains a somewhat controversial article by David F. Swensen, the chief investment officer at Yale University and was published in the Op-Ed section of the New York Times on August 13.

It is controversial as he contends a number of things including:

• That Managed Funds (called Mutual Funds in the U.S.) have employed market volatility to produce profits for themselves far more reliably than returns for its investors;
• The companies that manage for-profit mutual funds face a fundamental conflict between producing profits for their owners and generating superior returns for their investors;
• The rating systems used by the industry merely identifies funds that performed well in the past; it provides no help in finding future winners; and