Your Mutual Fund Manager Just Doesn’t Matter Much Anymore Hi Guys,
There is no universal correct answer to the fund management question. It depends on the specifics. Most funds these days are team managed, like 75% of them. For this majority, the answer is in the No bracket. But a respectable number of funds are managed by a mostly single or small group cohort that has a decisive influence on market decisions. It matters in this active group of fund managers.
The primary example here is the Warren Buffett/Charley Munger team. Any change here will likely have a major impact on how their firm will survive amd function. Even with this illustrious team, yearly performance varies over a wide range. Skill matters when investing, but luck and opportunities are unpredictable and also enter the performance equation. In the marketplace, the only certainty is outcome uncertainty.
Certainly not all fund managers are equal. Do you remember the Steadman fund family? I do. Those funds had dismal performance records for many years. Just like there are some long term losers, there are some long term winners. The trick is to identify them early. That's not an easy job.
Good luck for a successful search. A significant number of exceptions always exist.
Best Wishes
ADDED THOUGHT: Statistics are helpful, but can be misleading when incompletely reported. It is not enough to simply report the average of a Normal distribution. That's nice, but not enough. The standard deviation, the maximum and minimum values, and the sample size are needed to permit a meaningful interpretation of that statistic. Buyer beware!
Your Mutual Fund Manager Just Doesn’t Matter Much Anymore "Management change in a fund has no bearing on future returns."
Nonsense, and the M* report said no such thing. While funds, on average, may perform the same after changes as before, that says nothing about individual funds. If half the replacements were by managers who improved their fund's performance, and half the replacements were by managers who degraded their funds, the average would be a wash.
What the M* study said was that they couldn't figure out a priori which changes were the better ones, not that the a change in an individual fund had no bearing on the fund's future returns.
I'll take Rekenthaler's summary of the report over WaPo's. If you want to skip the anecdote and get to his analysis, skip down to the
Mixed Signals section.
Rekenthaler Report,
What to Do If Your Fund Changes Portfolio ManagersM* report,
The Aftermath of Fund Management Change
Better Than Expected, Barely Good Enough: Profits And Stocks The seasonal trend is for stocks to go soft during the summer ... especially, August. From what I have read, this seems to be so more times than not. I'm not surprised that earnings need to catch up with valuation. Stocks are not cheap as the article points out. I'm looking for a fall stock market rally and I'm thinking there needs to be a pullback (of sorts) for stocks to rally off of.
At the first of the year my thinking (and call) was that sometime during 2017 the S&P 500 Index would reach 2475 (or thereabouts). It's done that. Now, I'm thinking that the Index might do 2550 before year end (or thereabouts) if Congress can get it's act together in the near term and earnings continue to meet (or exceed) expectations. Will the Federal Government have to shut down due to the debt ceiling and/or lack of budget approval? What a way to run things. I'm thinking this is something that needs a fix along with healthcare and tax reform.
Isn't investing interesting?
Skeet
