Most funds companies are not fiduciaries

[Rick Ferri]

Here is an interesting comment from Scott Simmon's Fiduciary Focus column on Morningstar.com.

"Mutual fund companies do not have a fiduciary duty to investors in their mutual funds, but they do have a fiduciary duty to shareholders in those fund companies. That set-up characterizes Fidelity, for example, but it doesn't characterize Vanguard, because Vanguard does have a fiduciary duty to investors in its mutual funds; indeed, the investors in Vanguard funds are the same as the owners of that fund company. (The legendary John Bogle often speaks of the necessity for mutual fund management to be fiduciaries to the investors in their funds.) In the main, though, mutual funds are simply products whose management offers no fiduciary protection to those that invest in them."

[hlfo718]

I believe the mutual fund board has fiduciary responsibility to the investors but unfortunately many of these board members have ties with the mutual fund company, even though a majority is supposed to be independent. Hard to break this cycle when there are billions of $ involved.

[tfb]

Is Vanguard really a fiduciary? If you decide to invest 50% of your portfolio in its Precious Metal and Mining fund, how does Vanguard know it's of your best interest to do so? Does Vanguard do something to stop you?