Tag: fund management

Potato Chips and Mutual Funds

Quick question:

What do potato chip manufacturers and mutual fund companies have in common?

They both have to pay for shelf space.

Potato chip makers pay supermarket chains for prime space on store shelves. Fund management companies pay brokerage houses for pushing their products. There is a difference, however, between the two. The potato chip deals are legal, and represent an incentive for the chip makers to make sure that good product is on those expensive shelves. In the mutual fund case, it is not so legal, and presents brokerages with an incentive to push poor performing funds on their unsuspecting customers. I hope the latest SEC crackdown puts some additional shady deals in the spotlight, and the perps in the hotseat.