Mutual fund bankruptcy comes amid industry woes
These aren't exactly the glory days for mutual funds.
The days of the celebrity mutual fund manager have long passed. The industry's bread-and-butter, retail investors, still seem to be punishing the industry for the sins of Wall Street that came to light in the aftermath of the financial crisis.
So what is the impact of Alethelia's bankruptcy filing?
The company once managed more than $7 billion and boasted "one of the best long-term performance records for American growth stock funds," according to DealBook.
The article noted that Aletheia, "attracted billions of dollars from large pension funds and foundations. It counted among its clients Michigan's state pension fund and Ewing Marion Kauffman Foundation in Kansas City. The firm had also attracted the brokerage units of Goldman Sachs, Morgan Stanley and Bank of America Merrill Lynch, all of which had had Aletheia on its list of recommended managers for its individual clients."
But as of late, it seemed to slowly implode. It was accused by the SEC of maintaining deficient records. It's hired a new CEO, who quit in just months. It also experienced a wrongful termination suit by a former executive exposed all sorts of dubious activity, including the lavish lifestyle of the founder.
It would be grossly unfair to call the Aletheia saga reflective of significant industry trends. The company certainly had unique problems. Still, institutional investors will be a lot less tolerant of shenanigans and internal strife these days, especially if performance has dried up. You really need to have your house in order to stand out these days.