Mr Shah said he had decided to step back from running the company’s flagship £2.8bn Special Situations fund next year, and that he was handing it to small-cap star Alex Wright.
He told clients on a conference call that he was “not burnt out” but that he no longer wanted to put the necessary “intensity” into the job.
The move means Mr Shah spent just more than five-and-a-half years running the product which he inherited from Anthony Bolton in January 2008.
Mark Dampier, head of research at Hargreaves Lansdown, said it was with “great regret” that Mr Shah was stepping back from fund management.
“There are not that many good managers around so to lose one is a real shame,” he said.
Mr Dampier added: “It is with great regret that someone at 42 is leaving fund management as he should be coming into his own.”
The forthcoming change has led backers of Mr Wright’s small-cap fund to raise questions about the “challenge” that will now be put on him when he takes on Mr Shah’s fund alongside his product and his Special Values investment trust.
Ian Aylward, head of multi-manager research at Aviva Investors, said he invested in Mr Wright’s small-cap fund and would be meeting the manager to find out about the “demands on his time now and how it will be split”.
“I’ll also ask if it is a role that Sanjeev has found very intense, how might Alex cope with the intensity?” he added.
The multi-manager added that he would also be seeking to find out more about the “experience and appropriateness” of Mr Wright’s co-manager Jonathan Winton and wanted to find out how the “DNA of the Special Situations fund might evolve given Alex’s prior lack of focus on mega caps”.
Gary Potter, co-head of multi-manager at Thames River, said he also invested in Mr Wright’s fund and would be keen to find out how the manager’s time would be divided.
“Alex has done a good job on the small-cap fund and an issue for us is to understand where the small-cap fund now fits in his roster,” he said.
“The more mandates you give someone there have to be priorities and he will have a £3bn fund and £300m fund.
“We are happy with the small cap fund and want that to continue and that is what they should be ensuring.”