Alternative investments may come and go (how are your cocoa futures doing these days?), but mutual funds remain the lifeblood of the American portfolio, with roughly 7,700 of them quietly overseeing $12 trillion in assets. And yet, far too few of the funds are the lean stock-picking machines we'd like to see. Only 20 percent beat Standard & Poor's 500-stock index in 2011, and many charge expenses and fees that eat up whatever good returns they do generate. Some companies also fudge their marketing, making it hard for customers to know what they're investing in (imagine a "small-cap stock fund" full of Treasury bonds). It all raises the question, Why isn't there oversight here -- some watchdog trying to improve these funds?

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Illustration by Alexandria Compain-Tissier

Jonathan Dahl

Oh, wait, it turns out funds do have watchdogs. Every fund, in fact, has its own board of directors that is charged with representing just one constituent: you. Just as a corporate board might oversee a company, these boards are supposed to challenge fund managers to perform well and keep fees down. But after hearing that far too few were doing that job, we asked staffer James Sterngold, a veteran investigative reporter who has shared in a Pulitzer Prize, to take a look. Mind you, this isn't a world that's easy to get much information on: Fund directors tend to say little about the meetings they hold, while pocketing some handsome, six-figure paychecks for this work.

James's story is called "It's Not Our Job," and we believe you'll agree that it's an apt description of some directors' attitudes. Since the crash of 2008, there has been much talk about financial-sector reform, both from the government and the industry itself. The role fund directors are playing, or not playing, is worth adding to the conversation.