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  • Writer's pictureMatt DeLong

What stops an investment fund manager from investing in their own fund?

You REALLY WANT part of a fund manager's income to be generated from their own risk exposure in their own fund — “skin in the game”.

It’s common for a fund manager to have a large portion of their net worth tied up in their own fund. Personally, I wouldn’t invest in a fund where they DON’T have significant capital invested in their own fund — why would I invest in their fund if they don’t invest in their own fund? Why would I take a risk in their fund if they don’t take a risk in their fund.

Most have ethics rules about “front running”…where they buy stock in a personal account ahead of their fund investing significant capital in that same stock.

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