We know that a good fund manager plays important roles in fund's performance and success. When a fund manager leaves, does it affect fund performance? What happen to your investments? So what does a change in fund managers mean to a unit trust fund investors? Should you worry when a fund manager leaves?
First of all, whether or not the absence of any one fund manager would greatly impact the fund's performance depends on how the company's investment management process is structured. Some companies assign only one man show (a star fund manager like Chief Investment Officer) to run and call the shots while others could have different members of the investment team focusing on different asset classes or on specific sectors instead of funds.
Therefore, where it is a team effort, the leave of an individual fund manager should not impact fund performance so much. However, when the investment head leaves, there could be a difference in the funds' investment performance because the whole fund investment approach could be changed.
Besides the structure of the team and the person who is leaving, it is important to find out whether the company has set guidelines for the fund management process. Then no matter how good or bad the manager is, the process will largely determine the performance. We can't deny that the fund managers play an important role in terms of risk appetite in picking up certain stocks but the most important thing is the whole investment process. Fund managers will gather everything to assess certain risks and even if they're the designated fund manager, they get input from other members in the team.
If the investment concept and system are in place, investors will not be too worried about a fund manager leaving. Within the fund management team, there is fund management expertise, experience, knowledge and adaptability. Especially when the team is big, other members can help with the fund managing in the interim.
However, it's arguable that fund management boils down to the fund manager's decision making, because philosophy and approach aside, the fund managers still have a lot of discretion. The other party involved is the investment committee, but typically it does not dictate investment decision making except making sure that proper due diligence is done before investing and that the parameters are adhered to.
In 2004, US fund tracking company MorningStar compared funds that experienced management changes with those that kept their managers in the last decade. The result, about half maintained their performance, for better or worse. The top performing funds from 1993-2000 continued to outperform their benchmark indices regardless of management changes.
Thus, if you heard the fact that your fund manager is leaving, should you stay in or move your money?
Firstly, don't panic! If the fund has been underperforming, a new manager may actually be good news. Evaluate whether it's just a normal turnover where a single fund manager resigns, or there's a complete change in management. A change in management could mean a total revamp of the entire operations of the fund management company. The objectives and investment strategy could be totally different. It's important to determine if the policies are still within the investors' investment objectives. If it differs, then you can opt to leave.
If you've decided to stay in, keep an eye on the fund's performance. Industry players say it takes about six months to a year before you can tell whether the new fund manager can perform.
Last but not least, if you are a new investor and you have not made any return, it is probably not very wise to move.
Michael Russell Your Independent guide to Investing |
ไม่มีความคิดเห็น:
แสดงความคิดเห็น