We think it is always important to know who a fund's manager is, whether the fund is run by one person or a whole team. Equally important is how long the person or team has been running the fund. Make sure that the manager who built the majority of the fund's record is still the one in charge. Otherwise, you may be in for a surprise.
For example, Oppenheimer International Small Company (OSMAX) is likely to look very different following the departure of Rohit Sah in February 2011. Sah had a distinctive, bold style, and although it backfired occasionally, over time it provided excellent returns. Instead of searching for a single replacement, two managers from Oppenheimer will lead a team of seven, each of whom will contribute ideas. The fund may still end up being a solid option, but it won't likely have the same unusual style it did under Sah going forward.
Of course, not every manager change is a cause for potential concern. Matthews Pacific Tiger remained one of our favorite Asia focused funds even after it shuffled its management team at the start of 2008. Mark Headley, who came on board as a comanager in 1996 and took the helm several years later, gave up his lead manager position at that time for health reasons. That was a blow, as Headley is one of the most seasoned and skilled Asia investors around. But he stayed involved with the fund as a comanager. Moreover, we had ample reason to believe in the two new lead managers, Richard Gao and Sharat Shroff, who had good records at the fund's siblings. Indeed, over the trailing three years through May 2011, Matthews Pacific Tiger has gone on to beat more than 90% of its peers..
Where Managers Matter Most--and Least >>