Is a Star Fund Manager a Blessing or a Curse?

In recent years, the resignations of high-profile names such as Richard Buxton and Neil Woodford have forced asset managers to implement fast succession plans

Jeremy Beckwith 2 September, 2015 | 11:57AM
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Very successful – or ‘star’ – managers are a double-edged sword for asset management firms. The assets they attract are fabulous for the firm when all is well and times are good, but even the most successful managers don’t want to do the job forever, and when they decide to move on, the assets, revenues and profits of the asset manager can, and typically do, fly out of the door even faster than they came in.

In a world of increasingly centralised investment propositions, a relatively small number of fund selectors can simultaneously decide that a fund is no longer preferred and a manager change can be that trigger.  This can quickly generate huge outflows as those following their models take action.

In recent years, the resignations of high-profile names such as Richard Buxton and Neil Woodford have forced asset managers to implement their succession plans at very short notice. Within a year of the announcement of their resignations, Woodford’s former fund, Invesco Perpetual Income, lost £4 billion of assets and Buxton’s old Schroder UK Alpha Plus fund lost £2 billion of assets.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Invesco UK Equity Inc UK Inc1,258.16 GBP-0.90Rating
Jupiter UK Growth L Inc251.21 GBP-0.76Rating
Schroder UK Alpha Plus Acc2.41 GBP-0.70Rating

About Author

Jeremy Beckwith  is Director of Manager Research for Morningstar UK