Mutual fund performance, it appears, is linked with self-confidence. A new study by researchers at the London Business School and the Georgia Institute of Technology confirmed the growing wisdom in the fund industry concerning fund managers and their investments: that managers who invest in their own funds deliver better fund performance, on average, than those managers who do not. So reports the Wall Street Journal.

The study used a sample of 1,300 mutual funds in the United States, and found that funds whose managers invested in them at the end of 2004 returned an average of 8.7 percent in 2005, compared to an average of only 6.2 percent for funds whose managers did not self-invest, so to speak. The researchers even found that fund performance increased three basis points for every increase of one basis point in ownership by management.

The Journal also notes that some fund companies have already recognized this correlation, and have begun acting accordingly. Janus Capital Group Inc. and Franklin Templeton Investments both put percentages of their fund managers' bonuses into shares of their own funds, and Putnam Investments tries to make its managers' ownership information easily accessible to investors, while Royce & Associates requires senior portfolio managers to invest at least $1 million in each and every fund they run. According to fund tracker Morningstar Inc., Janus , Royce & Associates, Artisan Partners and American Funds rank at the top of fund families, in terms of average manager investment. 

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