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Fund Spy

Is the Era of the Star Fund Manager Over?

We wouldn't call it history just yet.

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In October, Janus announced that it was filling the void left on  Janus Fund (JANSX) by one of its stars, David Corkins, with two managers instead of one. Days later, news surfaced that Fidelity plans to have a broad lineup of managers running some new funds rather than entrusting them to just one person. In a different twist on the same theme, Vanguard has gradually moved more to a system of multiple managers over the years. But, in this case, Vanguard has combined multiple outside subadvisors to manage several of its funds.

We've noticed a growing trend toward multiple managers at a number of fund companies. There are several reasons driving a shift. For one, institutions, consultants, and financial advisors may be reticent to entrust client assets with a fund run by a single manager who's not backed by a very deep team. Those constituencies drive a lion's share of flows, and fund shops are paying attention to what they favor. Fund companies are also painfully aware that investors who buy a fund because of the manager often run for the hills when that person leaves or retires. Thus, a move to multiple managers can help smooth over high-profile departures and reduce the rush of outflows that often come with it. Finally, there are more assets than ever in mutual funds, and the job has grown more complex.

Perhaps the most enticing reason for fund companies to consider a multiple-manager system is the success that American Funds, Dodge & Cox, and Primecap have had with it. Those firms' ability to deliver performance, gather assets, and handle growth has driven rivals to consider whether a group of managers is a better mousetrap. At the very same time, some legendary single-manager funds, such as Bill Miller's  Legg Mason Value (LMVTX) and Bill Nygren's charges at Oakmark, have hit rough patches.

Karen Dolan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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