NYT: The Mutual Fund Merry-Go-Round

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From David Swensen, Chief Investment Officer at Yale University, writing online for the New York Times:


"...Too often, investors believe that mutual funds provide a safe haven, placing a misguided trust in brokers, advisers and fund managers. In fact, the industry has a history of delivering inferior results to investors, and its regulators do not provide effective oversight.

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. In general, these companies spend lavishly on marketing campaigns, gather copious amounts of assets — and invest poorly. For decades, investors suffered below-market returns even as mutual fund management company owners enjoyed market-beating results. Profits trumped the duty to serve investors..."


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Link: http://www.nytimes.com/2011/08/14/opinion/sunday/the-mutual-fund-merry-go-round.html?_r=1&adxnnl=1&hpw=&adxnnlx=1313323210-Ns2dHZcS1dzqN3FqHp8eAQ