The fund management industry is going through a period of change that many investors will want to keep their eye on. This week Fidelity stalwarts Jeremy Podger, who runs the Global Special Situations and World funds, and head of multi-asset Eugene Philalithis announced they are to retire in early 2024.
It is a seemingly busy time for fund managers retiring, with the likes of Bruce Stout at Murray International trust, Janus Henderson’s John Bennett and Margaret Lawson at SVM all announcing their intention to retire in the coming months. Richard Buxton also retired from Jupiter at the end of last month.
In conversation with one fund manager this week, it was mooted that this could be a delayed reaction to the Covid pandemic, with veteran fund managers giving it a few years but ultimately deciding now is the time to enjoy their hard-earned pensions.
Although it brings a lot of uncertainty, this could be viewed as a good thing for the asset management industry, but can cause problems for investors, who may have owned a fund for the manager’s experience and expertise.
There are some key things to ask yourself before deciding what to do. Looking at who is taking over the fund is a good start.
For example, Tom O’Hara has been co-manager of the Henderson European Focus Trust alongside FE fundinfo Alpha Manager Bennett since 2020.
On the one hand, some will appreciate that he has had some time with the veteran stock picker and will back the much younger replacement. Others, however, may be concerned about his relative lack of experience and have concern that he is unproven at being the sole fund manager.
In the case of Philalithis, Fidelity is bringing in a veteran as a replacement in the form of Talib Sheikh. Here the opposite problem is true. Sheikh has had a successful career spanning more than 20 years at both JP Morgan and Jupiter but will likely be coming in with different ideas. Investors must surely wonder how much the portfolios he is to take will change under his stewardship.
This is not to say that one is preferable to the other or that both of the new managers will not be a success, but they each give investors different things to consider.
There are also pros and cons to getting fresh managers onto a fund – regardless of their experience level. New managers may feel a need to earn their reputations, while there is a risk some managers who have been around a long time may be coasting on former glories, moving a fund more towards a benchmark index to lock in outperformance previously made.
Whether or not to sell will ultimately come down to how confident an investor is with the successor and whether there is a better, more certain option on the market.
But like it or not, investors will need to get used to it. Covid appears to have sped up the retirement process in a number of industries as people decide they have enough money to retire on. Why should fund management be any different?