To move or not to move – that is the question that has been teasing investment advisers this year, probably more than any other.
I would prefer if all the fund managers I support could be chained to their desk until retirement. Unfortunately, this is not very practical.
So what should you do if a fund manager walks out on a fund? Should you sell it immediately or sit on your hands? Unfortunately, the answer is not black and white, even if most people would like it to be.
Let us look at Aberdeen technology, a fund launched in 1982 which has an excell-ent long-term track record. The same fund manager has not been running it from that date. Indeed, some of the best-known tech managers today used to run this fund including Mike Bourne (Finsbury), Alan Tory (SocGen) and Tim Woolley (just leaving Henderson).
In all, there have been six changes of fund manager during its life. The last change was the loss of Tory to SocGen. Yet his successor, John Pullar-Strecker, and his team have also been highly adept at running this fund. In other words, Aberdeen tech has continued to be a top-performing fund and there has been no need to sell out of it.
In the early part of the year, many column inches were devoted to Jupiter. A man just arriving from Mars might have thought from the commotion that every single fund manager had left the group rather than just one because of ill health.
Income fund manager William Littlewood's replacement, Anthony Nutt, has an impressive CV of his own, including excellent performance with its sister, the high-income fund. Yet many commentators not only suggested selling the income fund but every Jupiter holding on the basis that the whole management team was about to leave.
This was pure conjecture and speculation. Moving clients' money on the back of it is akin to gambling with other people's money.
The outcome so far is that Jupiter income is back in the top quartile since Littlewood left and Nutt took over. Some 75 per cent of the Jupiter stable is in the top quartile, with the majority of funds performing above average. Pure panic was caused for no reason.
In the last few weeks, we have learned of another high-profile change – that of the Henderson tech team. Once again, mass hysteria has descended upon the financial community. It may be that in this case a move is justified but a wait-and-see approach will surely be more sensible. After all, a number of outcomes are possible.
Henderson is able to keep the team by outsourcing the management of its fund.
Henderson sources another tech team.
The former Henderson team open up for new business, allowing investors to follow the managers rather than going to a completely different group.
Switching out could therefore prove costly and unwarranted. We need to know more facts before making a decision.
There are cases when I believe a move should be made, such as when Albert Morillo left Scottish Widows. This decision was based on his ability and a total lack of confidence in Scottish Widows Investment Management, which at the time was about to merge with Lloyds.
Each case needs to be judged on its merits and facts, not on emotional opinion.
When you have been around for almost 20 years, as I have, you remain cynical of some investment advisers' motives. A good deal of publicity can always be assured should you decide to slag off any investment company, especially a company like Jupiter that in the past has hardly endeared itself to the press and many of the advisers recommending it.
This clearly attracts potential new clients who believe to sell up and move is a decision, whereas to sit tight and hold is not. Patience is the hardest investment discipline to master.
Finally, that word commission cannot be forgotten. Advisers whose clients held Jupiter outside an Isa or Pep did not receive trail commission. Therefore, a change in manager gave them a perfect excuse to switch to a group that did. Even if they did not take any initial commission, they were going to be earning extra money from renewal.
I reserve my worst condemnation for those discretionary managers who already charge an annual management fee and, in addition, charge for both selling and buying, giving them literally thousands of pounds of extra fees. Can they honestly say they are putting their clients' interests first rather than their bank balance?