Trustnet Magazine 60 March 2020 | Page 4

Cover story 4 / 5 [ KEEPING IT UP ] Anthony Luzio attempts to find out how long a top fund manager can be expected to maintain a period of outperformance Going the distance T he downfall of Neil Woodford brought the entire concept of a star manager into question. If the standard-bearer for active management in the UK can capitulate so spectacularly, what hope is there for anyone else? Of course, the exact circumstances that led to Woodford’s downfall are unique and it is unlikely anyone will take such a reckless approach to liquidity again. Speaking more broadly, industry commentators warned long before last year that it is always a cause for concern when a star manager decides to change strategy – even though such a small number connected the dots with Woodford. But this begs the question: how long can a star manager “keep it up” when they stick to what they know? Warning signs Aside from a change of strategy, there are numerous other warning signs that investors need to look out for. Paul Green, a member of BMO’s multi- manager team, points out these will vary depending on the type of manager and the style they adopt. “If it’s a stockpicking manager with an active multi-cap process and there is fast asset growth, this is a potential warning sign, because the manager may be forced up the market-cap spectrum where there is typically “If it’s a stockpicking manager with an active multi-cap process and there is fast asset growth, this is a potential warning sign” TRUSTNET trustnet.com