What should you do when a fund manager exits?

Investors who put money into actively managed funds do so in the hope that the fund manager, or team of managers, will deliver market-beating performance.

If that doesn’t pay off, they’d have been better off in a low-cost index fund or exchange-traded fund (ETF) tracking the ups and downs of a particular stock market, sector, or theme.

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Successful stock pickers often attract plenty of followers, with Terry Smith and Nick Train arguably the biggest household names at present.

However, this poses a problem: what should an investor do when a fund manager leaves, or decides to hang up his or her boots?

Fund manager changes so far in 2026

Two big names are stepping back from Janus Henderson. It was announced in July that veteran UK equities manager James Henderson will retire in June 2027 after more than four decades in fund management.

Alongside Laura Foll, Henderson manages investment trusts Law Debenture (LSE:LWDB) and Lowland (LSE:LWI), as well as the Janus Henderson UK Equity Income & Growth fund.

Foll, who Janus Henderson notes “has worked alongside James for many years and has played an increasingly central role in managing the portfolios”, will continue as lead portfolio manager.

The second announcement concerned bond specialist Jenna Barnard, who will retire at the end of 2026. Barnard spent two decades as a manager on the Janus Henderson Strategic Bond fund, which she ran with John Pattullo until his retirement last year. John Lloyd is due to take on portfolio management responsibilities across the firm’s global bond range.

Also retiring is Fidelity’s long-serving fund manager Sam Morse, who has overseen Fidelity European Trust (LSE:FEV) since 2011 and Fidelity European fund since 2009. Morse will retire in October 2027. His co-manager, Marcel Stötzel, will take over, with another manager, Alexander Laing, also coming on board.

Other fund manager changes so far this year include Sven Borho stepping down with immediate effect in August as lead manager of Worldwide Healthcare (LSE:WWH). Co-portfolio manager Trevor Polischuk has become lead portfolio manager, and Geoff Hsu was appointed co-portfolio manager. Borho had been involved in the trust since its launch in 1995, although he didn’t become a named manager until 2013.

In another change, Richard Hallett left the IFSL Marlborough Multi-Cap Growth fund. Will Rosier and Eustace Santa Barbara have been appointed as the new co-managers. Hallett had managed the fund since 2005. 

History shows that a change in a fund or trust’s lead manager can have a big impact, for better or worse, so investors should always take note.

Here are some top tips on how to decide whether to hold or fold.

Style guide

A fund’s style should have a big influence on whether an investor holds or folds. In his book How to Pick a Good Fund Manager, John Chatfeild-Roberts, head of strategy for independent funds at Jupiter, writes: “Some firms have a regimented style of managing money, allowing little room for managers to demonstrate their flair. Others allow talented individuals the freedom to perform.”

Key-person risk is therefore important to assess. Has one fund manager been highly influential in calling all the shots, or has it been more of a team approach, with a couple of named co-managers or deputy fund managers? If it’s the former, then a fund manager leaving for another fund firm or retiring, is arguably more of a blow.

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Will the way the fund invests change?

Another important thing to consider is whether the new fund manager is going to stick to the current investment process or make changes. In most cases, the investment process will remain the same. But if that isn’t the case, then it’s no longer the same fund as when you bought it, so it could be time to move on.

A fund changing its investment approach is not necessarily a bad move. There will be a reason for the change, and it could lead to improved performance.

But if a fund is no longer doing what you want it to do, it is probably time to hit the sell button. For example, if you bought it for income purposes and it is no longer paying dividends.

Succession planning

In the event of a fund manager retiring, consider how long the succession planning has been in place. Has the new fund manager been a co-manager or a deputy fund manager for a number of years, or have they been drafted in relatively recently?

Investors will want the handover of how the fund or trust is managed to be smooth.

The main difference between a retirement and a fund manager exit is that the fund firm will generally have more time to prepare for the former scenario.  

Why is the fund manager leaving?

When a fund manager leaves for a rival, a key question to ask is: why?

Some fund managers depart big fund firms for a boutique, so they can be a bigger fish in a smaller pond.

Backing a boutique has the advantage of the fund manager’s interests usually being more directly aligned with fund performance. This is due to the fact that he or she typically has a bigger stake in the overall business.

Another potential benefit is that boutiques usually have more independence in the way they manage assets. In contrast, in larger management groups, there can be pressure to toe a corporate line.

Of course, greater freedom is not always healthy. Particularly if there’s a lack of oversight in how the fund manager invests and if the manager’s not being challenged appropriately.

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Is the entire team jumping ship?

Sometimes whole teams are poached by other investment firms. This is arguably a sign to sell, as a lot of the expertise will have to be built up from scratch.

In addition, the culture that’s been created by the team also departs with them.

‘If something major changes, we sell’

For some, a change in management is a strong reason to sell. Rob Burdett, of Nedgroup Investments, advocates considering from the outset whether there’s any reason not to sell and switch to a fund that isn’t tainted by change. He argues that not selling carries a potential opportunity cost, and that manager change involves risk.

However, it’s important to note that since he manages a portfolio of funds, Burdett will pay lower fees when buying in and out of funds. Private investors need to be more cautious about trading fees racking up.

Should you stay or should you go?

As a rough rule of thumb, the following guidelines may help you make your decision.

Stay with the fund if:

• The manager is retiring and there’s been good succession planning

• The departing manager and the new one have worked together in a transition period

• The manager was a team player and the team has remained in place

Follow the manager if:

• The manager is a solo star operator

• The whole team is going with the departing manager

• The new fund is a strong match for your needs

Seek pastures new if:

• The incoming manager appears to be making major portfolio changes

• The incoming manager is an unknown quantity

• The investment approach of the fund has changed and no longer meets your needs

And remember…

It’s important to bear in mind, as the fund management industry so often warns, that past performance is no guide to future performance. While there are some really good active fund managers, the reality is that not even the best fund managers are immune to a change in fortune.