InvestmentsOct 28 2013

The cult of the fund manager

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      Over the years, there has been a growing trend for the ‘celebrity’ in fund management. Whether it has been built up by advisers or the press or fund houses themselves is debatable, but having a star fund manager can be instrumental in attracting investment.

      High-profile names such as Neil Woodford, Anthony Bolton, Hugh Young and Bill Mott will be familiar to those beyond the industry, but with many changes to the investment world over the past few years, such as the RDR or the upcoming clean share class, is it time to forget about big name managers?

      The average fund manager tenure is less than five years, although there are some exceptions. Despite recently announcing his impending departure, Mr Woodford has been managing the Invesco Perpetual High Income fund for more than 25 years and Mr Bolton managed Fidelity’s Special Situations fund for 28 years before retiring for the first time.

      Manager departure

      When a star manager leaves a fund management group it is headline news in the trade press, with many analysts telling investors to sell or to switch to the manager’s new firm, expecting investors to follow like herds of cattle as the abandoned fund may fail. But does a manager move really have much of an impact on fund performance?

      Chart 1 shows performance data for the £234m Liontrust UK Growth fund over the past 10 years as at 30 September. When management duo Jeremy Lang and William Pattisson left the firm, it had a near-disastrous impact; following the announcement in January 2009, shares in the group fell by a third to 81.75p.

      The firm has since recovered after John Ions took over as chief executive. The share price is now more than 240p and Liontrust has been seeing continuous results both in funds and group business. In September, the firm announced in its half-year end trading results that its assets under management had increased to £3.4bn at close of business on 24 September 2013, up from £3bn in March.

      Since March 2009, Anthony Cross and Julian Fosh have managed the Liontrust UK Growth fund. The pair also manage the Liontrust UK Smaller Companies and Special Situations funds. As shown in the Chart, with the exception of a slight dip in 2011, the fund has seen a near-consistent run of positive returns. At the time of Mr Lang and Mr Pattisson’s departure, many commentators were telling investors to sell their funds – perhaps upon reflection it would have been a ‘hold’.

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