Skin in the Game

I confess to having been deeply sceptical when I read an appeal last week by a boss of a fund management firm (Schnider,Walter & Kollegen)  to make it an obligation for fund managers to invest personally in the funds they manage. For Mr Walter, the notion that having some ‘skin in the game’ makes for better investment decision-making is so self-evident it barely needs defending. Nevertheless, the article cites a Morningstar study from 2010 that revealed above-average performances among funds where the manager held a personal stake. Continue reading