's John Rekenthaler answers the question: Is the Star Manager Extinct? He says, "Not completely."
He does acknowledge that the star manager is becoming less important than years past, when the reputation of the PM used to be the most important factor in considering a fund. Even more important than the expense ratio of its sponsoring company.
Two assumptions were important to that mindset, Rekenthaler said.:
1) That fund managers operated in their own bubble.
2) Past performance records are strongly correlated to future performance records.
Today those beliefs are not widely held. Now investors are aware that the system molds PMs. Analysts and conversations with the company's other managers and corporate risk management affect PMs decisions. The connection between past performance and future performance is also believed to be much looser.
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