The Hindu Business Line : To track the fund or manager?

You do not know the fund manager personally but you largely agree with his views that newspapers have reported. And, then, one fine day, he is no more with the fund house. To put it in other words, he has said bye-bye to the asset management company that employed him and has instead decided to join another outfit.

Welcome to the world of fund manager changes.

Here is reality that is quickly catching up with Indian investors, especially so in the context of competition among rival fund houses, higher pay packets, greater pressure to perform, more attention from the media. In short, the whole works.

At a time when funds are getting more commoditised, decisions taken by fund managers to join other places are making news like never before. Let us not waste precious newsprint to recall all their names, but it is perfectly right to say that quite a few heavy-duty names have zipped in and out in the recent past.

In fact, the market is perpetually agog with speculative stories about those who are probably next in line.

We all know that most fund management departments have been strengthened in recent times, thanks particularly to the profusion of products that has lately taken place. Asset management firms, in a race to shore up their AUM and improve performance, are forever placing a premium on good fund managers.

Let us check out Morningstar, which tracks funds quite industriously. "One of the toughest challenges facing fund investors is deciding what to do when a fund changes managers. There are so many questions about whether the strategy will change and how good the new manager is", is how it puts it in a recent report. Incidentally, some of Morningstar's comments about such changes have been quite strong, and at times brutally frank.

Here is what a CEO - we needn't name him here but he was a CIO at a leading fund house not very long ago - told us about flighty personnel: "These changes will continue to happen even as the (mutual fund) industry matures and there is greater diversity in terms of companies, products and customers segments. The business is becoming very HR-critical and no one can blame good fund managers if they wish to find greener pastures".

Want examples of such fast movements? Take Mr Rajiv Shastri, a young man who had joined as ABN AMRO MF's head of fixed income in its early days and quit almost immediately to take over as CEO of the fledgling Sahara MF. Then, quite suddenly, he quit again.

Or consider Mr Vinay Kulkarni, who left UTI MF to join handle Deutsche MF's equity funds. And then, in almost no time at all, he moved to Tata MF. It's a short step for a man (especially because Deutsche MF and Tata MF have their offices nearly facing each other on two sides of the same road) but it may well be a leap for faith for investors.

Such things happen, is how most people will react. The question is, what should unit holders, especially the ordinary ones, do when their favourite fund manager shifts base? Is there a case for them to move their investments as well, tracking the path traced out by the specialist in question?

Feedback may be sent to nilanjan@thehindu.co.in

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