Mutual Fund Management

A mutual fund is only as good as its management policy. The fund's prospectus provides details on the people in charge of managing the fund.

The chapter of a mutual fund prospectus that describes the fund's management includes the board of directors, the advisor, the portfolio managers, the transfer agent, and the distributor.

Board of directors

The role of the board of directors is stated briefly.

Advisor

The advisor makes investment decisions. The advisor section spells out in detail what the advisor does. It also provides the advisor's mailing address and the name of the controlling shareholder of the advisor.

Portfolio managers

The prospectus describes the portfolio managers. Each manager is briefly profiled with his or her educational and work history. Some managers manage more than one fund.

Transfer agent

The transfer agent, who disburses dividends, is identified. In many funds, the transfer agent is also the advisor. This part of the management chapter also describes how the transfer agent is compensated for its services.

Distributor

The distributor, who distributes shares to investors, is identified. In some funds, the distributor is related to the advisor.

While you may not recognize famous names in the management section, you should check to see that the managers have strong backgrounds in the kind of investments that the fund specializes in.