Do we believe in teams, or superstars?
That’s a question for sportswriters. It’s also a question for investors. Years ago mutual fund companies seemed to bank on the rock-star portfolio manager. Superstars like Fidelity’s Peter Lynch were all the rage. They wrote books and gave speeches. Everyone wanted to invest with them.
But a funny thing happened. Companies that put all that capital into a shining star found that the star could lose its luster. First, people are fallible. When Peter Lynch retired, his successors never seemed to fill his oversized shoes. Second human capital has a tendency to grow legs. When a money manager is successful, he often will develop a personal relationship with his larger clients, who might be willing to follow him if he moves to another firm.
So mutual fund companies have been fighting this trend. They’ve stopped telling clients who their managers are. Suddenly, the funds are “team-managed.”
Only many aren’t, really. They’re just as dependent as they ever were on one principal decision maker. Only now, investors can’t tell who that is. Or follow him when he leaves. Not to denigrate teams. They’re great. I work with one. But sometimes they’re used to hide the managers from their clients.
Douglas R. Tengdin, CFA
Chief Investment Officer
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