Does A Fund Manager's Exit Matter?

If you are a sports enthusiast, you know how vital the role of a captain in a team sport is. Along the same lines, the expertise and experience of a fund manager are as critical to a fund's performance. Vardan Pandhare helps you to decode the impact of a fund manager's exit

-  Vardan Pandhare

As Ron Chernow, an American writer and journalist put it, "Mutual fund managers are trapped in this rather deadly vicious circle - the more successful they are, the more money flows into their mutual fund. Then, it is more difficult for them to beat the market averages or even to match their past performance. In the India of today, mutual funds have become one of the greatest investment instruments to democratise wealth. It is a profitable platform with the potential to turn your hard-earned money into a fortune over time.

And the person who is bestowed with the responsibility to ably handle your investment is the fund manager. However, fund managers change employment or the fund they manage when better chances arise. Investors, though, are bothered by this. This situation arises because of the fund's track record. You decide to invest in it and then the person in charge of increasing the investments leaves. What action should investors take in this situation and how do investment firms handle this? Let's decode this scenario.

The Exit Plan

Any mutual fund's performance is determined by its fund manager. As a result, when the fund management leaves a fund, the investors are frequently forced to decide whether to keep investing or withdraw their money. There is no right or typical response to this query or uncertainty. There have been instances when the removal of the fund managers harmed the performance of the fund or where the hiring of a new fund manager revitalised it.