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

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

EPFO can pay 8.5% interest in 2009-10

THE Employees’ Provident Fund Organisation can comfortably offer 8.5% interest rate to its 4.41 crore depositors during 2009-10 and still record a surplus contrary to Rs 139-crore losses suffered by it for giving the same benefit during the current fiscal. The issue of return to the depositors would be discussed at a meeting of the ‘finance and investment committee’ (FIC) on Thursday, agenda for which lists that maintaining an 8.5% interest could still give the fund a surplus of Rs 6.4 crore on the investment made by the fund. If EPFO maintains the interest rate of 8.5% on PF deposits, there will be a surplus of Rs 6.4 crore at an estimated income of Rs 12,994 crore in 2009-10. In case the interest is raised to 8.75%, the fund would suffer a loss of Rs 366.77 crore and the deficit would be still higher at Rs 739.94 crore if the rate of interest is fixed at 9%. FIC gives recommendations on financial matters to the apex EPFO body Central Board of Trustees (CBT), which takes the final ...
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