Frank holmes is a conflicted man. he is the majority owner and chief executive of U.S. Global, a San Antonio, Tex. firm that offers mutual funds to the public. He also is a director of each nominally independent fund; that means he is supposed to act on investors' behalf and hold down the management fees that get paid to his own company. His dozen funds have, as a group, put in a mediocre performance over the past five years while charging 2.5% in fees―nearly double the industry average, the Morningstar ratings service says. At the same time, U.S. Global runs in-house accounts for its own benefit. Who gets the best stock picks? Holmes insists there are "written procedures" to make sure fund investors get a fair shake. The procedures are not disclosed. You have to trust him.
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