How Manager Departures Affect Shareholders

Don't panic if your investment trust manager resigns - it’s unlikely that the fund’s performance will tank immediately and can create an attractive buying opportunity

Jackie Beard, FCSI 13 February, 2014 | 10:43AM

All too often investors are faced with decisions to make as a result of their fund manager jumping ship. First and foremost, investors shouldn’t panic, especially if it’s the manager of an investment trust. It’s in situations such as these that the independent board of directors really comes to the fore—after all, it’s their responsibility to appoint a new investment manager. The asset management firm can of course make a recommendation, but the board is free to disregard this and not just accept the next available team member. Indeed, they can choose to appoint a new firm if they believe there is no-one that fits the bill at the current one.

Put your trust in the independent board of directors

Each case is specific and needs to be carefully assessed. It’s unlikely that the fund’s performance will tank immediately—although in the case of investment trusts it’s usual to see the discount widen on such news. But sometimes that can create an attractive buying opportunity, too.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Baillie Gifford UK Growth176.01 GBP-0.70
Edinburgh Investment Ord459.04 GBP0.89
Fidelity China Special Ord312.50 GBP0.16
Fidelity Pacific A-Dis-USD36.80 USD-0.63
Jupiter US Smaller Companies934.09 GBP0.98

About Author

Jackie Beard, FCSI

Jackie Beard, FCSI  is Director of Manager Research Services, Morningstar EMEA

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