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