What to do when your mutual fund manager leaves the fund house
Don’t do anything
Yes, you read it right. You shouldn’t do anything based on the news that your fund manager has put in his papers. You should wait for more details before taking any decision. Do not panic and avoid knee-jerk reactions, say mutual fund advisors.
Philosophy of the fund house
Reputed AMCs follow a common investment philosophy. They would describe the approach as 'process-driven.’ Such fund houses ask fund managers to follow the common philosophy and do not allow them to tweak it according to their personal preferences. If you are dealing with a fund house that follows such a strategy, the exit of the fund manager may not have a huge impact.
Is your fund manager a rock star?
If your fund manager is following a highly personalised fund management style, you should be worried about his exit. There are several examples of popular schemes losing their charm after the exit of their fund managers and never recovering their former glory. If you are in such a situation, you should be worried.
Wait for the new fund manager
It is always better to wait to find out who is going into the shoes of your fund manager. They say if a fund manager with a good reputation comes as a replacement, you can continue with the scheme. In fact, many mutual fund advisors have adopted this approach towards L&T schemes. They are waiting to see who is going to replace SN Lahiri.
Give a year or two more
If the scheme is losing its charm continuously for a year or more, you may consider exiting the scheme. If a new fund manager is trying to do something different, you may give him more time. Otherwise, you may sell your investments in the scheme and invest in a better performing scheme in the same category.
Should you follow the fund manager?
What if the fund manager joins a rival fund house, should you follow him. As said before, if he is a rockstar who plays by his own rules, you may follow him. However, if he is joining a fund house that follows a process-driven fund management strategy, you need not be in a hurry to follow him. Wait and watch how he is settling in there before taking a final call.