Skip to main content

Impact of Mutual Fund Manager Change

Buy Gold Mutual Funds

Invest Mutual Funds Online

Call 0 94 8300 8300 (India)

If I had to answer that in a few words, I would say "wait and watch". It is very natural to be concerned, but there is no need to act rashly and sell or even terminate your systematic investment plan (SIP). Here are a few guidelines to follow. Don't view any of them in isolation. But taken in conjunction, you would get a fairly good idea on what your next move should be or at least what you need to keep an eye on.

 

Check the fund's mandate
Some funds are very vulnerable to a fund manager's exit, others are not. If it is a fund that very closely tracks the benchmark (like an index fund) or has a very specific investment universe, then there should not be any cause for alarm. So funds that tap into the "top 100" or even "top 200" stocks by way of market capitalisation would not face too much of problem with a fund manager change. Neither would a fund that relies on a quant model for its stock picking process. Even the impact on a dividend yield fund would not be much.


If the fund is a multi-cap fund or a mid- and small-cap one, then the role of bottom-up stock picking and making the right calls is extremely important. A fund manager move in this case would be critical because it is his personal judgment that goes into adding alpha. So as you can see, not all fund managers are equally important to the funds they manage. Sometimes the very nature of the fund makes it less susceptible to fund manager changes. In other cases, it is cause for concern.


If it is a hybrid fund and the fund manager of the lesser allocated asset class leaves, then it should not bother you. For instance, if the fund in question is a 'Hybrid: Equity oriented' fund, then if the debt fund manager exits, it would not be as disquieting as in the case of the equity fund manager's exit. Also, in the case of fixed income there is not much of risk by way of credit and the fund's mandate generally states the maturity risk that is to be taken. Worst case scenario, you will get a mediocre performer but will be difficult to lose money.

 

Performance of other funds from the same stable
Look at the performance of the other equity schemes from the same fund house. Are there many which are also good performers? Or is it that all are poor performers and the only good one is the one you were holding? If you held the star performer and the fund manager has moved on, then it's cause for alarm.


Every asset management company (AMC) talks of processes being followed and how a fund manager exit would not affect any of the schemes. But that is not true. The fund manager's knowledge and expertise does make a difference. Unfortunately, end of the day, one does not really know how active a fund manager has been. But one way to gauge this is by looking at the performance of other funds from the same fund house. If a number of them are doing well, there could be a lot of truth to the 'processes' argument.

 

Fund manager's track record
There are two aspects to this.


First, look at the performance of other schemes run by the past fund manager. Did he have a positive impact on most of them? If he was lucky only with this one, it was probably the fund's mandate that worked in its favour.


Also, look at the performance of schemes managed by the new fund manager. What is his track record? If he has done a great job elsewhere, then he might just be a great fit for this fund, if not better. Consider that possibility too – that a new fund manager may actually work out better. If he has nothing to go by, or has been very average, then keep a very close watch on the fund.

 

Integrity of mandate
Talking of mandates, did the fund manager stick to his mandate? If it was a large-cap fund, were there times when his strategy changed to pack his portfolio with mid caps when the smaller stocks were rallying? If it was a thematic fund, did he follow the theme with precision? If not, then you should anyway ask yourself if you still want this fund in your portfolio.


Alternatively, if the fund manager did stick to his mandate, then you should keep a watchful eye to see if the new one at the helm is following suit. In other words – keep close track of the transition. He could maintain the same tilt of the fund, in terms of large cap, for instance, but might take a completely difference stance. If the earlier portfolio was largely into defensives, he may decide to get into momentum or growth stocks. Watch his moves, see how they perform and, most importantly, if they still are a good fit with your portfolio.

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

Best Performing Mutual Funds

    1. Largecap Funds        Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds     Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds    Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds             Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds              Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Gold Mutual Funds             Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

 

Popular posts from this blog

ICICI Pru Mutual Fund Dividend

ICICI Prudential Mutual Fund has announced dividend under the following schemes: Scheme Dividend ( Rs /unit) ICICI Pru Capital Protection Oriented Ser V Plan B-D 0.03611325 ICICI Pru Capital Protection Oriented Ser V Plan B Direct-D 0.03611325 ICICI Pru Balanced Advantage Direct-DM 0.06 The record date has been fixed as February 08, 2017. ------------------------------ ------ Invest Rs 1,50,000 and Save Tax upto Rs 46,350 under Section 80C. Get Great Returns by Investing in Best Performing ELSS Funds Top 4 Tax Saver Mutual Funds for 2017 - 2018 Best 4 ELSS Mutual Funds to invest in India for 2017 1. DSP BlackRock Tax Saver Fund 2. Invesco India Tax Plan 3. Tata India Tax Savings Fund 4. BNP Paribas Long Term Equity Fund Invest in Best Performing 2017 Tax Saver Mutual Funds Online Invest Best Tax Saver Mutual Funds Online Download Top Tax Saver Mutual Funds  Application Forms For further information contact  SaveTaxGetRich on 94 8300 8300 ------------------------------ ------ Leave y...

What is Financial Freedom?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)     There were many things common between our Freedom fighters. All had the Single vision (Free India), common goal (independence) and had a disciplined and focused approach. They were ready to do anything and everything and had made so many sacrifices to see India free . But the road to freedom was not easy .They had faced lot many hardships, went to jail so many times and even confronted physical and mental torture from the British. There was one more thing which proved to be an advantage to our fighters that most of them were professional lawyers. The knowledge of legal issues and its impact on our country at large has helped them counter various bills and proposed new laws by the then government. It is due to their continuous effort that we are able to achieve the goal of Independent Indi...

Hidden Bank Fees

  What Banks Hide From Customers Imagine after a peaceful and exciting holiday you receive your bank statement with steep charges. You then rush to your bank and start confronting staff members and to your dismay, you come to know that the high end debit card was charged very heavily. Wouldn't this cause damage to your finances? So remember, the world outside is full of deceptive and double cheating people. Unethical practices are always used by company sales person in order to meet the target. Credit card companies, mutual funds and bank institutions always play dirty tricks to lure customers and the practices are rampant. So here's how you should be careful while dealing with your banks: High End Debit Card Charges While opening an account with a bank you opt for a debit card with minimal charges. But later on when you upgrade your card and opt for high end debit card the annual charge rise by a good amount. Though such a card has slew of features but it all comes at a high ...

Partial withdrawal from PPF

  Public Provident Fund (PPF) account has a lock in period   If you opened a PPF account to meet your retirement needs,, think twice about withdrawing from this fund before retirement. But provided it's an emergency here are the rules. Public Provident Fund (PPF) account has a lock in period before which you cannot withdraw your money.   The partial withdrawal is allowed after the completion of 6 financial years . This means that you will be allowed a partial withdrawal from 1 April 2017. The maximum partial withdrawal allowed is the least of the following: 50 percent of the account balance at the end of fourth financial year, 31 March 15 50 percent of the account balance of the end of previous financial year, 31 March 17.   There's a loan option available on your PPF account between the fourth and the sixth financial year. You can obtain a loan of up to 25 per cent of the balance in your account. However, this will attract interest of 2 percent more than the prevailing ...

Updating a minor PAN card upon becoming adults

  Updating a minor's PAN card once they become adults A PAN card issued in the name of a minor does not contain the minor's photograph or signature, and therefore, cannot be used as a valid proof of identity. Once a minor PAN card holder turns 18, the relevant changes must be made in the PAN records. A new card is then issued bearing a photograph and signature. Application The applicant is required to fill up the "Request for new PAN card andor changes or correction in PAN data" form. The form can be filled up online by accessing NSDL's Tax Information Network website and clicking on the online PAN application tab. Information The applicant must mention the existing PAN number in the application and check the `photo mismatch' and `signature mismatch' boxes, and submit the online form. The form must also be printed out, signed by the applicant, and submitted along with two photographs. Documents Identity and address proof in the form of a copy of the app...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now