Last week we had the furore over the departure of Neil Woodford. The David Beckham of fund management perhaps, with the shy persona (to us press at least!), the phenomenal skills and the killer curve ball – see how he avoided TMT stocks in the late 90s or banks in 2008.
Not forgetting our summer transfer sagas: the big money move of Richard Buxton from Schroders to Old Mutual (like Gareth Bale perhaps?); Euan Munro left Standard Life GARS for pastures new at Aviva, a giant franchise with a new management team (Marouane Fellaini?); and we’ve learnt Fidelity’s Sanjeev Shah is staying with the same employer despite negotiations about a change in his position (Wayne Rooney?).
So is what we have seen in recent months a sign of things to come in terms of a merry-go-round of fund manager moves, and do we as an industry put too much emphasis on star names?
Star players
Ben Yearsley, head of investment research at Charles Stanley Direct, believes the number of fund manager moves may not actually have increased this year rather the departures that have happened have been more high profile.
“I don’t think we have reliance upon star managers because if they are performing well then we don’t have a problem,” he says.
“In one sense though this may get worse going forward because there will be more and more people having to provide for themselves and saving for their retirement, therefore managers running huge sums of money are going to become more commonplace. The good managers will always, and have always, stood out.”
“The numbers are so much bigger now with £30bn attached to Woodford. When you go back to when Anthony Bolton first stepped back in 2007, he had £6bn in the Fidelity UK Special Situations Fund. Then you go back to 2000 when William Littlewood first stepped down from Jupiter Income and that was a huge fund then at around £1bn.”
Avoiding own goals
For Ken Rayner, head of investment research at Rayner Spencer Mills, investors should themselves learn from the approach of the star managers in sticking to their guns, and taking a long-term position.
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He explains: “What’s best for our investors? If £10bn does come out of Neil Woodford’s fund it could influence the pricing of those underlying stocks by market makers? We need to be careful we don’t create a bigger problem by being too sensationalist about it.
“We could do with less emphasis on individuals and more focus on what caused performance, not just the one manager who was picking stocks but the team of researchers and so on. But we like to focus on people and it’s in our culture, like football or celebrity where there is a star mentality, so that’s not going to be easy to change.”
Why is Richard Buxton buying miners? Watch our exclusive video interview here.
