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The Mutual Fund Scandal: 104 Poor Charlie's Almanack

Indexing is a wiser investment choice for foundations than direct equity investments due to the high costs of over 1% of principal annually. Indexing will remain effective for a long time, though not forever if most investors adopt it. The difficulty of selecting investment managers was demonstrated by the mutual fund scandal where many managers accepted bribes to betray shareholders, similar to accepting a bribe to kill one's own mother for insurance money. Many involved felt unjustly treated.

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36 views1 page

The Mutual Fund Scandal: 104 Poor Charlie's Almanack

Indexing is a wiser investment choice for foundations than direct equity investments due to the high costs of over 1% of principal annually. Indexing will remain effective for a long time, though not forever if most investors adopt it. The difficulty of selecting investment managers was demonstrated by the mutual fund scandal where many managers accepted bribes to betray shareholders, similar to accepting a bribe to kill one's own mother for insurance money. Many involved felt unjustly treated.

Uploaded by

sonystd
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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I think indexing is a wiser choice for the average foundation than what it is now doing in unleveraged equity investmentand

particularly so as its present total croupier costs exceed one percent of principal per annum. Indexing cant work well forever if almost everybody turns to it. But it will work all right for a long time.

The Mutual Fund Scandal


The business of selecting investment managers was recently shown to be even harder by the revelation that a signicant fraction of mutual fund managers took bribes to betray their own shareholders. It was as if a man came up and said, Why dont we kill your mother, and well split the insurance money? And many people said, Why, yes, Id like some of that insurance money. And many of them think what happened to them was unjust.

104

Poor Charlies Almanack

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