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Some fund managers keep large cash positions when they THINK a lot of redemptions are coming. This is another piece of market timing.
Historically I haven't found it difficult to beat most fund managers--but if I became one, I'd have the same problem they do--how to put large amounts of money into the market and take it out without causing a major move in the stock in question. Not easy. It isn't that I'm so smart, I just have my money to manage and there isn't enough to move markets, and I'm not so antsy as to sell every time the market has a hiccough.
The current plight of Janus, now facing massive redemptions after large capital gain distrbutions is a case in point. People literally must sell their shares to pay their taxes, and the manager MUST sell to meet redemptions. Look at the weakness in the shares owned by mutual fund companies in the morning in past weeks. Or read the Peter Lynch books, describing his being faced with massive redemptions in the '87 fiasco.
Being a mutual fund manager may pay very well but when you don't perform, job tenure is pretty iffy....
Best wishes, Chris
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