Why should mutual fund managers and other institutional investors intimately direct corporate management of the companies in which they invest? That function is far different from their job of selecting securities. They have little time or the ability to attempt to get too close to be involved.
I know that the job of an investment manager is to pick good corporate management. But that can be superficial at best. To truly evaluate what is good or what is bad management takes lots of on-the-site inspection and knowledge with which fund managers are not equipped. They may say they have that ability, but that would be mostly conjecture.
Despite this, there is a constant clamor from groups, usually with little business acumen, who insist that institutional investors, including mutual fund managers, micro manage each and every investment they make. That is an impossibility.
Another reason I suggest investment in funds that track indexes. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)
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