How to research the manager in charge of your money

Published by Mark King on 23 September 2015.
Last updated on 23 September 2015


But this arguably makes the job of an investment company manager more difficult - and finding a good one just as trying. So which investment company managers are the best? Does it depend on length of service - ie, experience - or can long-serving managers be too jaded to produce stellar returns?

According to the Association of Investment Companies, the investment company sector has a "strong track record of long-serving fund managers", but that doesn't stop many from jumping ship reasonably often. And there has been a number of fund manager changes in the sector in the last year or so.

Nearly half (45%) of AIC members with a 10-year history or longer have had the same fund manager at the helm for at least 10 years. But, since January 2014, some big names have taken the reins at new investment companies.

In July 2015, Paul Niven marked a year at the helm of Foreign & Colonial investment Trust, following a 17-year stint by Jeremy Tigue. In the same month, Wee-Li Hee celebrated her first anniversary managing Scottish Oriental Smaller Companies.

Dale Nicholls is enjoying only his second year in charge of Fidelity China Special Situations, while Mark Barnett (Edinburgh Investment Trust) and Wouter Volckaert (Henderson Global Trust) are also still relatively new in their roles.

JPMorgan Global Emerging Markets Income, Fidelity Japanese Values, and Henderson High Income have all experienced manager changes in the last few weeks alone.

In total, around a fifth (18%) of investment companies have appointed a new fund manager over the last year and a half, either as a sole manager or as part of a team, according to the AIC. But some sectors see more volatility at the top than others: in the last 18 months nine new managers have started in the Global investment company sector, while a third of AIC members have had a new fund manager in the Asia Pacific excluding Japan sector.

Ian Sayers, chief executive of the AIC, says: "It is interesting to see so many high profile changes in a relatively short period of time. This is in part a coincidence, with a number of managers having retired after a long period of managing their investment companies. And, of course, some fund managers simply choose to move on to pastures new.

"But it also reflects independent boards addressing long-term performance issues, a feature of the sector that is often underestimated but one which can be of huge benefit to shareholders."

The latter is an important point: corporate governance is high on the agenda at investment companies. As we reported in our March issue, investment company boards of directors have a wide range of responsibilities in overseeing performance, such as scrutinising the fund manager, setting strategy and up-to-date investment policy and (most importantly for investors) a legal obligation to represent and protect shareholders' interest.

Directors meet this final obligation by ensuring that the company is as successful as possible through its monitoring of performance, meeting several times a year to discuss how the company is doing and what it can do to maximise success.

So in some ways, the board of directors does the job of monitoring performance and selecting the best manager for the job, without investors having to worry too much.

This is perhaps why a majority of investment company investors tend to sit and hold their investments rather than chop and change frequently.

That said, many investors do want to conduct plenty of research into the men and women that manage their (potential) investments.

Online, each AIC company profile page gives details of both the board of directors, and the managers. It's also possible to filter investment companies by management group name, to see how managers and management groups have been performing over time. That way you can build up your own view of who is the best in each sector at any time.

But researching the manager should be only one part of your research when looking at investment companies. You'll also need to consider whether you want to invest a lump sum or make regular payments, and how much risk you are prepared to take.

It might also pay to consider how you are going to invest. For example, will you use a tax-efficient wrapper such as an Isa or even a pension?

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