Saturday, May 25, 2013 9:06:31 PM EST

Investing Classroom

Course 209: Why Knowing Your Fund Manager Matters
In this course
1. Introduction
2. Different Manager Structures
3. Why Managers Matter
4. Where Managers Matter Most--and Least
Quiz
Course Catalog

Introduction

Everyone remembers the glory days of Notre Dame football. In the late 1980s and early 1990s, under the watch of head coach Lou Holtz, the Fighting Irish team was a college powerhouse to be reckoned with. During his 11-season tenure, Holtz boasted an admirable 0.765 winning percentage and led the Irish to a national championship in 1988 (and fell just shy of capturing the crown in 1989 and 1993).

But all good things must come to an end. Holtz left in 1997. His replacement, Bob Davie, was never able to find his groove as the Irish spun to a virtually unheard of 25 losses during his five-year stint, and succeeding coaches have had mixed records at best.

Fund investors can learn something from this reversal of fortune. Like college football teams, mutual funds are only as good as the people behind them: the fund managers. Portfolio managers are the people who decide what to buy and what to sell, and when. Because the fund manager is the person who is most responsible for a fund's performance, knowing who's calling the shots and for how long is key to smart mutual fund picking.

Next: Different Manager Structures >>
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