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Mutual Fund Companies in Peril

October 27, 2008

How much confidence do you have in your mutual funds? If you are like most, you are looking at your statements - at least the ones that you dare to open - differently than ever before. That is probably because you thought that you had a good level of diversification and had some built-in protection since a professional and experienced manager was watching over your portfolio.

That has all changed now and most investors are totally disgusted and thoroughly dissatisfied with the returns their hard working managers have provided. The problem is now more evident than ever for many of these fund companies and may deserve to be shorted. Here is why…

You are not alone when you look at your portfolio of funds and wonder what happened. Investors are pulling money out of all types of funds at a record pace and mutual fund companies such as Legg Mason, T. Rowe Price Group, Janus, Alliance Bernstein and Franklin Resources are struggling and will continue to struggle on many different levels. As investors have been withdrawing funds due to their dissatisfaction with performance, even the fund company’s highest profit margins from money market funds has come under fire. In addition, competition in the form of low cost ETFs is also gaining strength as investors are looking for alternatives. (See “Mutual Fund Companies are Doomed” here)

Read the full article on MSN TopStocks HERE

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Written by Andrew Horowitz · Filed Under MarketMash, Short Ideas, Stocks 

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