When we think about mutual funds, we often picture them run mainly by a single manager, perhaps with a team of supporting analysts. Look up the Muhlenkamp (FUND:MUHLX) fund, for example, at Morningstar.com, and you'll see just Ron Muhlenkamp listed as manager. So when the fund picks losing stocks like Cisco Systems (NASDAQ:CSCO), General Electric (NYSE:GE), and Transocean (NYSE:RIG), and therefore underperforms the market, you can start to question whether Muhlenkamp personally has lost his touch.

Similarly, Fidelity's mammoth Magellan (FMAGX) fund has been known for its many big-name managers in the past (Peter Lynch, for example), and is now listed as being run by Harry Lange. Its performance has also faltered in recent years, with bad returns from top holdings like Nokia (NYSE:NOK), Applied Materials (NASDAQ:AMAT), and Corning (NYSE:GLW).

But the way funds are being managed these days has been changing. Many funds are now managed not just by a large team working together, but increasingly by a whole bunch of teams. Fund companies, even respected names like Vanguard, are parceling out portions of each of their funds to be managed by different asset management companies.

The Vanguard Growth Equity (VGEQX) fund, for example, is managed by Baillie Gifford Overseas, based in Scotland, and Turner Investment Partners, based in Pennsylvania. Look up the well-regarded Vanguard Explorer (VEXPX) fund at the Vanguard website, and you'll see a whopping seven managers listed:

  • Chartwell Investment Partners
  • Granahan Investment Management, Inc.
  • Vanguard Quantitative Equity Group
  • Wellington Management Company, LLP
  • Kalmar Investment Advisors
  • AXA Rosenberg Investment Management LLC
  • Century Capital Management, LLC      

So what?
I see some pluses and minuses in the approach.For starters, by dividing a fund's assets so much, the fund is not invested according to any single vision. If there's a brilliant manager in the mix, his or her ideas probably won't have enough oomph to propel the fund to great heights, due to other managers' performances being mixed in. 

Indeed, in a Business Week article last year, Amy Feldman explained that Vanguard strictly maintains set allocations to various managers. So if I'm managing 20% of a fund's money and I double it, I will have much of the assets in my care taken away and redistributed to the other managers, to keep my portion at 20%.

If managers are doing well, it's a shame not to let them keep growing the money in their care. If they're performing well, why take funds away? The opposing viewpoint would argue that few managers stay hot for long streaks, and that Vanguard must have a similar level of confidence in the other managers.

Another way to think of it is as diversification. Just as you would likely spread your money over several different funds or stocks, the fund company is spreading its assets over several different managers. If the system used by one delivers catastrophic results one year, it will be buoyed up by the performance of the others.

What to do
I'm not saying you should avoid funds that have multiple managers. But you can at least be a more informed mutual fund investor. When reviewing your funds, or funds you're looking at, check to see who is managing the money, and whether the funds are beating the market over the long haul. Since most don't, it makes sense to invest much, if not all, of your money in broad-market index funds. If you want to aim higher, add some managed funds to the mix -- but be very choosy.

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Longtime Fool contributor Selena Maranjian owns shares of General Electric and the Muhlenkamp fund. Vanguard Explorer and Muhlenkamp are Motley Fool Champion Funds recommendations. Nokia is a Motley Fool Inside Value recommendation. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.