The group analysed 15 investment funds who had star fund managers leave between 2013 and 2017. It showed that with the fund managers at the helm, the funds delivered 3.6% over and above their benchmarks. However, when they left and new managers took over, this dropped to 0.4%.

The concept of ‘star’ fund managers has been controversial, particularly in the wake of performance from high profile managers such as Neil Woodford. Woodford left Invesco Perpetual, where he managed £24bn across two main funds, to set up Woodford Investment Management. His performance at the new business has been lacklustre and the Woodford Equity Income fund currently sits second to bottom in the UK All Companies sector over three years.

Fund managers aren’t always able to replicate their strong performance in a new environment. If they move from a business with a strong analytical team, for example, but can’t replicate it in their new setting, performance may drop. It can cost money to switch, which is why investors often think twice before doing so.

However, the new research suggests this is worth doing in most cases. Adrian Lowcock, head of personal investments at Willis Owen, commented: “There is continual debate over the impact a manager can have on the performance of a fund. However, there is little doubt that a small band of star fund managers can have a huge positive impact, and our research shows what happens when they leave. However, in many cases the new managers who take over still out-perform their peers, but perhaps to a lesser extent. The difference in relative outperformance cannot be accounted for by the performance of the underlying market alone.

“This doesn’t necessarily mean that investors should follow the manager. In many instances the manager retires, or the style happens to drop out of favour and the manager has a bad patch. Each situation is unique so it is important to consider all the facts before deciding what the best course of action to take is.”

Lowcock picks out the following ‘star’ manager funds for attention:

Man GLG UK Income – This fund offers a highly disciplined, value-focused approach to investing in UK equity income. Henry Dixon’s proven value approach underpins this fund. He targets companies trading below the team’s estimate of the company’s asset value. The fund has a greater focus on mid-sized companies.

Lindsell Train Global Growth – Nick Train believes that a highly concentrated portfolio of high-quality, cash-generative, strong and easily understood business franchises will outperform the market and reduce volatility over the long term. A key strength lies in the managers’ deep understanding of company strategies and their ability to see through the noise.

Jupiter European – This is an unconstrained strategy aiming to find the best opportunities across the continent. Manager Alex Darwall takes a high-conviction approach; he builds the fund from the bottom up following thorough analysis of individual companies. There is a strong focus in his process on having an in-depth understanding of how a company works and on maintaining regular contact directly with its management.