Skip to main content

What to do when Fund Manager of a Mutual Fund Changes


To begin with, do familiarise yourself with the identity of the fund manager for all the schemes you own and track any changes to the designated manager. AMCs are required to advertise fund manager changes through newspaper advertisements 


If a manager change is due to an internal reshuffle in the AMC (say a senior fund manager being elevated to CIO), it isn't a big worry, as you can budget for some continuity in strategy and style. But when the manager of your scheme bids adieu to the fund house, you certainly need to be on your watch.


You should take fund manager churn very seriously in the following circumstances.

  • When your equity scheme was managed by a seasoned manager who has weathered two or three market cycles and he quits.
  • When the manager of your micro-cap or mid-cap fund quits.
  • When a scheme with a value or contrarian mandate sees a manager change. The Indian market is overcrowded with growth-style investors, so being a value investor or contrarian requires experience and conviction.
  • When your fund is a multi-cap, 'opportunities' or tax-saving fund, its mandate is usually loosely defined, allowing the fund manager to freely shift around the style or market cap in the portfolio. Schemes with such loosely defined mandates, if they are good performers, can see a significant impact if the man or woman at the helm changes.


So assuming the worst has happened and the manager of a performing equity scheme has called it quits. What do you do now? Well, don't immediately panic and jump ship, but watch the fund's performance closely for the next six months. Be wary of slippage in the scheme's ranking within the category and returns relative to its benchmark.


Returns apart, there are other parameters that can signal that big (and undesirable) changes are underway in the scheme's portfolio, too.


1.  Watch for a spike in the scheme's portfolio turnover ratio. If the monthly factsheet shows a spike after a fund-manager change, it is a sign that the new manager is replacing a good part of the portfolio, which can lead to changes in the returns or risk profile.

2. A shift in the scheme's market cap composition – from a large-cap tilt to a mid-, small-cap tilt, can also be a hint that the new manager isn't comfortable with the earlier strategy. A higher mid/small-cap weight can mean more risk and volatility.

3. Check out the fund's portfolio P/E and beta. A spike in the portfolio P/E can be a sign of the scheme moving from a value to growth focus. A shift from a low beta to a high beta (beta is the tendency of the portfolio to move with the market) is also an indicator of higher correlation to the market and thus higher risk.


If you own a top-ranking equity scheme and notice a slippage in performance after a fund-manager change, check out the above indicators.


A deterioration in performance, accompanied by a shift in strategy, market-cap or style, is good enough reason to sell the scheme and switch to a better alternative.





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 10 Tax Saver Mutual Funds for 2017 - 2018

Best 10 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. ICICI Prudential Long Term Equity Fund

5. Birla Sun Life Tax Relief 96

6. Franklin India TaxShield 

7. Reliance Tax Saver (ELSS) Fund

8. BNP Paribas Long Term Equity Fund

9. Axis Tax Saver Fund

10. Birla Sun Life Tax Plan



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 your comment with mail ID and we will answer them

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

OR

Call us on 94 8300 8300



 

Popular posts from this blog

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...
Read more

Good time to invest in Infrastructure Funds

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   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...
Read more

Tax Planning: Income tax and Section 80C

In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:   Provident Fund (PF) & Voluntary Provident Fund (VPF) Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free. Public Provident Fund (PPF) An account can be opened wi...
Read more

Fortis Mutual Fund

Fortis Mutual Fund, a relatively new player, it is still to prove its case and define its position in the industry. In September 2004, it came onto the scene with a bang - three debt schemes, one MIP and one diversified equity scheme. And investors flocked to it. Going by the standards at that time, it had a great start in terms of garnering money. Mopping up over Rs 2,000 crore in five schemes was not bad at all. The fund house has not been too successful in the equity arena, in terms of assets. Though it has seven equity schemes, it is debt and cash funds that corner the major portion of the assets. Most of the schemes are pretty new, and the two that have been around for a while have a 3-star rating each. The last two were Fortis Sustainable Development (April 2007), which received a rather poor response, and Fortis China India (October 2007). Fortis Flexi Debt has been one of the better performing funds, after a dismal performance in 2005. It currently has a 5-star rating. None ...
Read more

Floater Health Insurance Policy

Floater policy helps in covering your entire family under the umbrella of one policy with one sum as a premium and one sum as insured. It helps in covering all kind of costs as covered under medicalim. The only difference is that the cover is now valid for the family instead of one individual.   If need arises, floater policy can be used by any member of the family numerous number of times. The biggest benefit of this policy is that it helps in saving money by allocating the cover to various members of the family.
Read more
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