/ SELLING OUT / they leave this can cause a major upheaval ,” he says .
“ Whereas other investment companies , such as Newton and Threadneedle , adopt more of a team-based approach and so it might still be ‘ business as usual ’ even if the fund manager leaves .”
“ You should consider what will happen going forwards . What will the new management structure of the fund look like , will the investment process change and could performance actually improve as a result of the change ?”
Connolly says a good example is Miton UK Value Opportunities , which performed extremely well under the management team of George Godber and Georgina Hamilton .
Data from FE Analytics shows it trebled the gains of its IA UK All Companies sector in the first three years of its life , although performance took a hit when the managers left in June 2016 and many investors sold out – assets under management fell from £ 869m to £ 294m in the seven months after their departure .
However , Connolly spoke with Miton about its plans and when they recruited Andrew Jackson he decided not to sell : “ Jackson has proved a worthy replacement and since he took over , the fund has been one of the best performers in its sector .”
Data from FE Analytics shows that CF Miton UK Value Opportunities has made 37.68
per cent since Jackson took charge at the start of July last year , compared with 22.6 per cent from its sector .
ALL ABOUT YOU It is not just about what is happening at the fund level , though .
“ The world is changing so much from an economic perspective and a fund that may have been suitable for the investment environment when you bought it a couple of years ago may not be suitable now ,” Nelson adds .
“ I ’ m not saying managers of mega cap funds can ’ t outperform , but if they aren ’ t as flexible as a more nimble fund , they may find it more difficult to add value ”
She says you also need to think about whether the funds you own are still suitable for your circumstances , as your attitude to risk is likely to change over time .
THE BOTTOM LINE The bottom line is that you don ’ t want to cling on to loser funds for too long , but you also don ’ t want to buy and sell funds on a regular basis as this will incur additional charges which will eat into your overall returns .
“ There often isn ’ t a straightforward choice whether you should sell an existing fund ,” adds Connolly .
“ If you are considering selling then ensure you understand the reasons why , make a rational and informed decision and don ’ t get swayed by companies whose main focus is to try and convince you to buy other products .”• trustnetdirect . com 5