Six lead managers in 10 years means something's not working.
Mutual fund investors typically would like their portfolio managers to stay in place for decades. The manager is one reason they bought the fund, after all. So, a change generally isn't welcome. But most fund investors will accept an occasional transfer of leadership, especially if the new manager already had spent a good amount of time on the team and the overall strategy remains in place.
More jarring are the cases where the new manager has no connection with the previous regime and upends the fund's approach. At times, shareholders can accept this, too, if the prior scheme wasn't working and the new leader has a proven record.
But when managers and strategies change with disturbing frequency, there's cause for alarm. That's the case at DWS International
From Stability to Something Else
Until 2002, the fund then known as Scudder International had a long and impressive history, though its growth tilt did cause problems in the tech-led market crash that began in 2000. Over the years, it hadn't changed managers often and its strategy stayed intact.
That changed when Deutsche Bank bought Zurich Scudder, the fund's advisor, in early 2002. The fund's longtime lead manager soon departed, and the new team installed by Deutsche was a mishmash. The lead manager and one comanager came from the firm's London office; another comanager came from its separately run New York group; yet another comanager was a holdover from Scudder. All grouped together in London, they installed a new strategy that downplayed the fund's previous theme-based approach and toned down its growth tilt.
A couple of years later, the fund was allowed to own a few more emerging-markets stocks than it previously had been. That wasn't the only difference. One by one, the comanagers from the initial Deutsche team left the group.
Then in 2005 the lead manager, Alex Tedder, departed. He was replaced by Matthias Knerr, who'd been an analyst on the fund before being promoted to comanager. Knerr tweaked the strategy, shifting the fund away from its almost-exclusive focus on the biggest stocks. He was also more willing to differentiate the portfolio from the weightings in the fund's benchmark, the MSCI EAFE Index.
The Next Phase--and the Next
The Knerr era was relatively successful for shareholders. His approach landed the fund in the foreign large-blend category's top half in both 2006 and 2007. It also outperformed in a difficult environment during the first seven months of 2008.