Portfolio managers don't invest in their own funds

It's always smart to pick a mutual fund where the portfolio manager has invested some of his own money. After all, he's taking the same risk, plus paying some of the costs and taxes that his shareholders do. But the results of a new study from Morningstar, the Chicago-based stock and mutual fund tracker, reveal that almost half (47 percent) of portfolio managers of US stock funds don't have so much as a nickel invested in them. In addition, 61 percent of foreign-stock managers avoid their own funds, as do 66 percent of managers of taxable bond funds and 71 percent of those who run balanced funds (which invest in both stocks and bonds). "The number of managers showing no faith in their process is staggering," says Russel Kinnel, Morningstar's director of mutual fund research. In general, he recommends avoiding funds where the manager doesn't eat his own cooking.