Just as when a star football boss move on, when your fund manager leaves for pastures new should you stick with the club or move with the manager? Scott Gallacher explains the reasons to stay or stalk.
Has Alex Ferguson done a Richard Buxton?
Well, not quite.
As you will probably know, Alex Ferguson is one of the most successful football managers of all time and after 27 years with Manchester United he has just announced that he is retiring at the end of the season. Whereas star fund manager Richard Buxton is moving to Old Mutual after almost 11 years managing the Schroder UK Alpha Plus fund.
Obviously with football the fans have little choice but to stick with their chosen team and hope they bring in a good replacement (Jose Mourinho or David Moyes anyone?). But with investments it is clearly different and when a star manager leaves, investors face a quandary of whether to stick with that fund, or to follow the manager…
Sticking with a fund can make sense for three key reasons: –
- Hopefully the existing fund was, and remains, appropriate for your own objectives, whereas the new fund might not be. For example, Anthony Bolton left the Fidelity Special Situations fund and ended up doing something completely different in investment terms by eventually launching a Chinese investment trust.
- The existing fund might be run primarily on a ‘team basis’ where the named fund manager might be more of a ‘director of football’ and their loss might have little impact on the future investment decisions or performance of the fund.
- The fund might simply replace the fund manager with one of equal or better calibre, in the case of the UK Alpha Plus fund, Schroder has poached Citywire AAA rated Philip Matthews from Jupiter.
Obviously with investments, like football, the future is unknown and successful managers with one team can fail with another. Anthony Bolton, for example, who was once highly regarded as one of the best fund managers in the country during his time with the Fidelity Special Situations fund has struggled with his Chinese fund.
When fund managers do move on it is important to take time to review your investments to check whether they are still appropriate and consider if you should you stick with the fund or move with the manager.
