Over 16 Percent of Equity Funds Have Had a PM Change Recently
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Tuesday, May 27, 2014

Over 16 Percent of Equity Funds Have Had a PM Change Recently

Barron’s Brendan Conway has taken note of the turnover in equity managers over the past three years.

Citing stats from analyst Todd Rosenbluth of S&P Capital IQ, he writes that 16.3 percent out of 6,185 U.S. equity funds tracked by S&P Capital have had a manager change since 2011.

He alerts readers that this turnover is important because, as he writes, “Fund managers bring their own style even when the mandate remains unchanged. This factor often makes comparing the fund’s own performance over time apples to oranges.”

Conway cites a paper written by Rosenbluth analyzing the impact such changes have had on the Fidelity Growth & Income and the Janus Contrarian fund.

In a way, this article represents an opportunity for fund firms to raise the debate on the significance of active management talent.

Conway himself writes that “I’ll guess most investors couldn’t name the person or people whom they’re trusting.”

The question is whether this is really a bad or a good thing.

Some firms, of course, take great pride in their PM talent, going to great lengths to promote this talent to financial advisors, platforms, what have you. Other firms forgo the PM star constellation system altogether and rely instead on more anonymous teams, or quantitative black boxes, or indexing.

It’s not like fund firms can hide PM changes. All an investor need do is go to SEC filings and such to learn what is changing in a fund.

How much attention does the investing public pay to fund PMs? Does it even matter as more in the industry move toward the paradigm of investment solutions and outcomes?

Yet another question to ponder as you evolve the ways you engage retail investors.

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