You are here: Home - Investing - Experienced Investor - News -

Fund manager moves: Has industry turnover become excessive?

0
Written by:
02/07/2014
Research by trade publication Investment Week has revealed only half of managers in the major IMA sectors have run their funds for five years or more.

The figures, compiled using FE data, show the extent to which manager turnover affects the industry, and raises questions over how portfolios would react in the event of market stress.

Across the six sectors analysed as a whole, just 50% of the 853 funds (as of 31 May) have been run by the same manager for more than five years. The worst offender was the Global sector, in which just 42% of managers have remained in place for that period, according to FE.

The data does not include funds launched over the past five years, but there is one crucial caveat to the numbers: managers’ old portfolios are not taken into account, meaning some may have run similar-style processes for many years, despite not being captured by the data.

However, with the last five years having been relatively smooth sailing for the asset classes in question, Andrew Summers, head of collectives at Investec Wealth & Investment, said the figures raise questions over how managers will cope with different conditions.

“I want a manager that has been through multiple cycles. What the data tells us currently is that half of managers have not even been through one,” he said.

“It is harder to do due diligence and have confidence in how a manager may perform if they only have a five-year track record [on an individual fund].”

Rob Burdett, co-head of multi-manager at F&C, said the need to “stitch together” track records is a familiar one for fund buyers.

“We are very happy to buy shorter track records anyway – largely because our process is driven towards bottom-up fund selection, rather than being dominated by asset allocation and finding a manager to fit it.”

With fund flows concentrating and funds often ballooning in size very quickly, Burdett suggested some moves are a result of manager remuneration not keeping pace with growth in fund size.

However, he cautioned: “[That said], it is an overpaid industry, the best managers love what they do, and they often have money alongside investors’ own.”

Burdett said the F&C multi-manager funds have been less affected by manager moves than some in the past 18 months, in part pointing to a preference for boutique funds, often from “owner-managed businesses.”

Nonetheless, one of the UK’s most popular sectors remains one of the most reliable in terms of manager tenure. The UK Equity Income sector may be perceived as one of highly concentrated fund flows in recent years, but 61% of managers in the space now have a track record of five years or more.

Managers who have run their fund for over five years
screen-shot-2014-06-26-at-1300

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
FTSE 100: This morning’s risers and fallers

UK stocks edged higher on Wednesday morning though upside was limited as investors showed caution ahead of some key risk...

Close