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Monday, December 05, 2011

Will PM Teams Outshine Stars?

News summary by MFWire's editors

A team-managed approach seems to be the new strategy for fund companies. Does this mean they're saying goodbye to star managers? Reuters' Jessica Toonkel ponders this question.

Reuters notes that some of the most respected names in the mutual-fund industry -- including Eaton Vance [profile], Federated [profile], Fidelity [profile] and Invesco [profile] -- have substantially increased their count of team-managed mutual funds.

Duncan Richardson of Eaton Vance says the move to team- managed approach has “eliminated the proverbial risk of being hit by a bus.” This new strategy will help fund companies protect possible fund returns, guard the company from poaching, and secure the outflow level seen at competing firms when in-house star managers lose their luster. Richardson also added that companies have come to the realization “that they are better off going for a systemic process than an all-knowing manager.”

But according to Morningstar equity research director Russ Kinnel, it might be tougher for a team-managed fund to get in front of advisers and investors. He says a team-managed fund is a “harder story to tell” which makes it harder to get noticed. And he wonders if the shift towards team managers is simply cyclical and not permanent.

Despite Kinnel’s warnings, fund companies have placed marketing dollars on this new approach. 

Edited by: Neil Anderson, Managing Editor


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