(MarketWatch) — One of the big questions mutual fund shareholders can face is how long to put up with a struggling manager.
Investors everywhere just got a good answer to that question from a surprising source: the Vanguard Group. Vanguard is the world’s largest mutual fund firm, known for low-cost indexed investments that at least generate the return of the fund’s benchmark. As of the end of June, according to the company, only five of the company’s funds had underperformed its benchmark over the last decade.
So when Vanguard fired a manager of one of those lagging funds late last week, it sent a double message to investors.
On one hand, the decision shows “best practices” — the adverse conditions to look for before dumping a manager.
On the other, it suggests that even good investors sometimes put up with bad management for way too long.
Chances are, investors can learn both lessons at the same time. (more)
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