The fund manager merry-go-round
One quality to look for when choosing an investment fund is the longevity of the fund manager.
Longer fund manager tenure does not necessarily result in better returns, but it should mean greater stability and a more consistent approach to managing money within the fund.
Investment funds with managers who have only been in charge for a couple of years, or those funds run by managers with a habit of moving around, are less attractive.
Yesterday was a busy day for fund manager movements.
At Fidelity, Tim McCarron announced he was leaving the firm early next year to take a break from fund management. He has been with Fidelity for sixteen years and is manager of the £3.5bn Fidelity European fund.
McCarron will be replaced at the helm of Fidelity European by Sam Morse, who currently manages the Fidelity Moneybuilder Growth fund. Replacing Morse on 1st January will be James Griffin. He has been managing UK Equities for eleven years at Fidelity, demonstrating consistent outperformance of his benchmark index.
Also announced yesterday was Michael Gifford handing over management of the £37m Old Mutual Equity Income and £25m Extra Income funds to Stephen Message with immediate effect.
Message joined Old Mutual from US private wealth manager Bessemer Trust late last year and had already been working alongside Gifford on the Old Mutual UK Select Equity fund. Unlike the Fidelity movements, this appears to have happened much faster without much of a planned transition.
The departure and replacement of a fund manager is not reason in itself to ditch your holding in a fund and buy an alternative. However, in all of the cases described above, investors will want to keep a close eye on not just performance but also changes to management style in the coming months.