Fund manager changes happen for many reasons and can occur at any time. Sometimes they may be prompted by a period of underperformance, other times a manager may simply decide to change firms or move to a new role.
However, a change in management can often herald a change in style and approach for a fund.
Indeed, there have been instances in the past where established managers of new funds or new managers of established funds have not produced the desired impact.
In this article we looked at several managers appointed towards the end of 2015 and looked at their first calendar year of performance.
Fidelity American
Aditya Khowala took over management of the £946.4m Fidelity American fund in September 2015, replacing Peter Kaye. Khowala had already managed Fidelity’s offshore American Growth Sicav and was manager of its FAST US fund.
It was widely anticipated that Khowala would apply the same approach to management of the fund as the other funds he manages.
The fund reported a 1.42 per cent return in 2015, lower than the sector average 4.18 per cent gain. It had failed to beat the average sector fund since 2010, according to data from FE Analytics.
Fidelity American vs sector during 2016
Source: FE Analytics
The sterling-denominated fund made 28.91 per cent in 2016, compared with a 29.31 per cent gain for the average IA North America sector fund.
However, returns were boosted by the fall of sterling against the US dollar following the UK referendum on EU membership.
In dollar terms, the fund was up by 8.07 per cent over the year compared with 8.40 for the sector average.
In comparison, Khowala’s Fidelity American Growth fund was up by5.34 per cent, while the Fidelity FAST US fund rose by 8.36 per cent.
Baillie Gifford Japanese Smaller Companies
Praveen Kumar took over the £304.9m Baillie Gifford Smaller Companies fund in December 2015.
He replaced former manager John MacDougall, who moved within the Baillie Gifford group focusing on global equities.
The fund was the IA Japanese Smaller Companies sector’s top performer in 2015, with a return of 29.00 per cent.
Performance of Baillie Gifford Japanese Smaller Companies vs sector in 2016
Source: FE Analytics
However, despite an equally impressive 27.11 per cent gain over 2016, the fund underperformed its peers. In comparison, the average sector fund returned 32.59 per cent last year.
Threadneedle Latin America
Ilan Furman joined the Threadneedle Latin America fund as manager in November 2015, taking over from Daniel Isidori, who was later to resurface at Japanese firm Nakatomi Capital.
Furman joined Threadneedle in 2011 as an equity research analyst, joining from Pictet where he was an investment manager.
The fund’s performance in 2016 was particularly strong as many emerging market equity funds delivered double-digit returns. It was a good year for Latin American strategies in particular, which dominated the top performing funds.
Last year the £508.8m fund returned an extremely strong 49.86 per cent. In comparison, the top performing broad regional fund Scottish Widows Latin American fund was up by 64.69 per cent.
M&G Global Basics
Somewhat unusually, Jamie Horvat took over as lead manager of this fund while the incumbent Randeep Somel remained as co-manager.
The fund, which invests in companies deemed to be beneficiaries of long-term shift in the global economy, with a minimum of 70 per cent invested in companies operating in basic industries, such as agriculture or manufacturing.
Having been a bottom quartile performer in 2015 with a 2.20 per cent loss, the fund was a top quartile performer last year delivering a 32.93 per cent return.
Artemis UK Select
Former Standard Life Investments star manager Ed Legget and Ambrose Faulks took over the Artemis UK Select fund following the retirement of Tim Steer towards the end of 2015.
The fund was a top performer in 2015 under its previous name – Artemis UK Growth – generating a 12.15 per cent return. However, the fund struggled to repeat performance in 2016, as Legget continued to overhaul the fund’s portfolio.
It returned just 1.8 per cent in 2016, compared with a 10.82 per cent return for the average IA UK All Companies sector fund.
Pictet Robotics
Karen Kharmandarian was appointed manager of the Pictet Robotics fund upon launch in October 2015 and was later joined by Peter Lingen.
The $1.84bn fund seeks to achieve capital growth by investing in companies exposed to “robotics and enabling technologies”.
During its first full calendar year, the fund achieved a 11.00 per cent return (in US dollar terms), compared with a gain of 5.43 per cent for the average. Its sterling return was even more impressive, up by 32.40 per cent over 2016.
Performance of Pictet Robotics vs sector in 2016
Source: FE Analytics
Its largest holdings include Google-holding company Alphabet, German electronics company Siemens and Japanese automation services firm Fanuc.