Morningstar has found that mutual funds whose managers have more than $1 million or more of their own money invested in their fund ranked in the 42nd performance percentile on average over five years. Funds whose managers own no shares fared much worse on average, ranking in the 54th percentile.

A great marketing point of course is that the managers are invested alongside the investors. But just over half of all mutual funds do not have their managers invested, notes Investment News.

This is a good lesson for hedge funds as well. At the very top, it's fair to say the general partners tend to have some skin in the game. I wouldn't be surprised if more limited partners started making it one of their checklist items, along with enhanced compliance and transparency items. It certainly can't hurt, unless the fund goes off the rails, but then everyone is harmed. 

For more:
- here's the article

Related Articles:
Revolt of the limited partners
Do hedge funds add value? On-going debate
More investors investigate hedge fund managers