7 of the Year's Biggest Manager Changes
Should you stay with these funds after the manager leaves?
A manager change presents one of the greater challenges in mutual fund investing. You need to figure out how important the departing manager was to the fund, how good the new manager or managers are, whether the fund's strategy will change, and if that strategy still fits with your portfolio.
To summarize, you need to figure out if the fund's competitive advantages will endure after the change. Ideally, you will have done a lot of the work in advance. You should already have an idea of how important the fund manager is and your thesis for owning the fund. If you do, the rest is a lot more manageable.
But it's easy to miss a manager change if you aren't watching your fund like a hawk. Let’s get you up to speed on some of the bigger changes announced this year. I encourage you to click through to our full analysis as I'm only touching on the highlights here.
We downgraded the fund's Morningstar Analyst Rating to Neutral from Silver as a result. Delano doesn't have a track record. He says he will maintain the strategy, but in cases where you have a dominant manager and a flexible strategy, you always want to come back six to 12 months after the departure to see if there are, in fact, any signs of a strategy change.
Arani was in charge of equity selection and asset allocation, and he did both well. He leaned heavily to the stock side most of the time and was an adept growth stock-picker, too. The bond side of the fund was run in an investment-grade strategy and a high-yield strategy, but mostly it was a relatively cautious mix that served as ballast against the fund's growth strategy.
Kelley has had decent performance at Fidelity Trend, though on a risk-adjusted basis it is less impressive. Most likely, Fidelity Puritan's equity sleeve will be like the more staid Fidelity Advisor Diversified Stock, however, and we don't have much of a record there. We lowered our rating to Neutral from Silver.
Comanager Michael Keller has taken the reins, and I certainly expect him to maintain the strategy. It is supported by a team of 11 analysts, and Hartch is still at the firm investing in companies pretty similar to those in this fund. Keller has been comanager since 2008. So, unlike the Oppenheimer fund, this one has a more experienced comanager and more analyst support. Is it still a good bet with Keller at the helm? We have the fund under review, and we're assessing the change as I write this. Come back soon for our verdict.
In addition, Vanguard made some change in its bond leadership in June 2018, so there's a little more in flux than is ideal. Vanguard's global head of credit Paul Jakubowski took over as global head of fixed-income indexing for a retiring Ken Volpert, and Vanguard municipal head Chris Alwine moved into Jakubowski's seat.
The good news is that one key competitive advantage, fees, remains in place. In addition, Vanguard puts strict limits on how its bond funds are run, so there's no chance it will change stripes or that any manager can harm the fund by making bold bets.
Palmer boasts a strong record at Vanguard Capital Value VCVLX, where he has been a manager since 2009. However, he has only been sole manager since July 2016, so we don't know precisely how well he has done.
Something else that won't change is the 30% of assets run by deep-value shop Pzena Investment Management.
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