Can Institutional Investors Manage Corporations?

Why should mutual fund managers and other institutional investors 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 close enough 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 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 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's an impossibility.

Yet another reason I suggest investment in funds that track indexes. (See the Earl J Weinreb NewsHole® comments.)