Manager Ownership

Being the managers rather of other people’s money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which (they) watch over their own.
– Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 1776

When I analyze mutual funds (or, for that matter, public companies, hedge funds or investment advisers and their firms), one of my first questions is: Are the managers “eating their own cooking?”

In other words, are the managers putting their money where their mouths are by investing in the strategies that they are responsible for? Are we in the boat together, or am I required to trust that they are looking out for my best interests?

You’re forgiven if you thought finding an answer would be easy. It is not. But don’t worry, I’ve done the legwork for you.

Vanguard is only required to disclose manager fund ownership once a year. Unfortunately, the updates come in bits and pieces, months apart, as prospectuses are renewed across a mix of fiscal year-ends.

And the disclosures, which are buried in the legalese, are fairly vague. Manager ownership is reported in seven categories: $0, $1–$10,000, $10,001–$50,000, $50,001–$100,000, $100,001–$500,000, $500,001–$1,000,000 and over $1 million.

In the following table, I have collected the data so you’ll know whether the paid managers of your investment dollars have a vested stake in a given fund’s success.

This table lists all of Vanguard’s actively managed funds as well as any index funds where a manager owns shares. At the end of the table, I list all of the index funds (and ETFs) with no manager ownership.