If fund managers don't invest in their own funds, should you?

   According to a recent survey by Morningstar, funds that make the investment research company's "Fund Analyst Picks" list have a much higher level of managers investing in their own funds than those dubbed as "pans."

   Among the funds in the Morningstar 500 database, the survey shows 46% have no investment by the fund manager. Broken down further, 59% of the foreign stock funds have no manager ownership, and neither do 65% of taxable bond funds and 70% of balanced funds.

   There may be a legitimate reason in some cases. For example, a single-state municipal bond fund run by a manager from another state would have no manager ownership because he or she would not be eligible for any of the tax advantages. Or a foreign manager may be barred from investing in U.S.-domiciled funds.

   "For managers who run niche funds or run a lot of funds, there's a good reason for them to be at the lower end of the ranges, but not at zero," Morningstar says. It also laments that the SEC only requires managers to report ownership by ranges, including an entry range of $1 to $10,000, which allows a manager to claim ownership with only a $1 investment, and a top range of more than $1 million, which is a small amount for highly-paid fund managers.

   The survey shows an average investment of $370,000 in those funds that Morningstar considers well-managed "picks," and average investments of $54,000 for those it considers poorly- managed "pans." After excluding areas that Morningstar says have good excuses for low ownership-such as target-date, single-state muni and index funds-the average "pick's" investment is $503,000.

   The complete survey can be found at  HYPERLINK "http://news.morningstar.com/articlenet/article.aspx?id=241183" http://news.morningstar.com/articlenet/article.aspx?id=241183.