Mutual Fund Families Deliberately Sacrifice Performance of Some Funds to Shore Up Losses Elsewhere in "Family"
Wednesday, March 28, 2012 - 23:30
in Psychology & Sociology
Mutual fund families routinely and purposely use the capital in affiliated funds of mutual funds -- AFoMFs -- as "insurance pools" to offset or prevent cash shortfalls in other funds in the family. Further, this practice, which sacrifices performance by the AFoMF for the benefit of the fund company, is not outlined in prospectuses and may be in direct conflict with AFoMF shareholder interest.