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Chapter 12. At the Scene of the Crime: F... > Red Flag 10: Managers Who Divert Hot...

Red Flag 10: Managers Who Divert Hot Stocks into One Fund at the Expense of Another

Investors must feel confident that money managers are being fair in their allocation of hot issues and losers between different funds. In the mid-1990s, Dreyfus Corp. money manager Michael Schonberg diverted nearly all the hot IPOs he was allocated into one of three funds he managed, the Dreyfus Aggressive Growth Fund. The effect was to drive the new fund’s return to a spectacular 119 percent in just eight months.


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