Investors should be cautious of ditching a fund after a “star” manager leaves, the chief executive of Axa Wealth has said.
Mike Kellard said research shows there are dangers attached to investors making “knee-jerk” investment decisions.
Instead he suggested taking at least a year to assess the new manager’s performance.
Mr Kellard said: “Looking at the 12-month period up to the point that 10 recent ‘stars’ left their funds and comparing this to the annualised performance of their successor, seven out of 10 funds performed better under the new manager when judged against their peer group.
“By switching funds you are incurring costs based on an unprovable and unquantifiable benefit.
“It is important for investors to remember that, in most cases, funds are fronted by a single fund manager but, in practice, run on a team approach.”
According to Axa Wealth’s research, Schroders UK Alpha Plus, Fidelity Special Situations and Fidelity China Special Situations were all in the top quartile of their peer group before their “star” managers left.
However, the last of these – which had been managed by veteran fund manager Anthony Bolton until he retired – remained in the top quartile in the 12 months following the managers’ departures.
Adviser view
Gavin Haynes, managing director of Bristol-based Whitechurch Securities, said: “Some groups are quite guilty of building up the star manager culture and then as soon as the manager leaves it becomes all about the team.”
