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Well the readily revelation that is that your mutual fund manager has left the firm might have you wondering if you should do the same with more on this Chuck Jaffe.
MarketWatch senior columnist.
I -- what do you feel you bought the fun vacation wanted active management -- had it and now the fund manager is up and leaving.
Well you want to find out.
Basically why the managers leaving and is this good news or bad news and as a general rule we're talking bad news if you bought the -- for the manager well you're not necessarily happy that they're leaving.
But you don't.
Jettison the fun just because the manager left instead to sort of put him on your watch list yet.
-- take a look mean a lot of the ratings agencies firms like Morningstar they will take their rating often basically suspend it while they wait to see what's gonna happen.
So last year you had.
Arguably the best manager of all time Ed Owens from vanguard health care he announced his retirement.
But it was his team and his co manager taking over and there wasn't anybody close you know you're gonna give them a chance to show that they weren't upsetting the apple cart.
Well everybody isn't -- Eleanor Peter Lance -- Bill -- -- any of those famous names.
Sometimes it's hard to know if the manager -- left because it doesn't give up a lot of coverage is there any way to find out.
Well you can always check -- your fund company but for most people they're gonna find out more by accident unfortunately.
Fund companies really don't have to tell you when their manager changes any -- they've.
Written their prospectus is so that it's not required but when you find out like if you own -- twenty where Ron Sachs left at the end the last month.
At one point he was a manager with a good portfolio -- a good track record.
But at the last two funds he ran his record was terrible.
And you gotta take a look at -- this one hasn't had a good manager no matter who they've tried.
Maybe if they're giving up on the manager I should give up on the fun.
So you're not gonna give that much time to find somebody can make things better you might just look -- go you know that manager didn't give me what I wanted.
Hence why am I stand with the firm at all.
Well I think that's a great point and that reality is that does some of these fund groups and managers turn around all the time.
I mean eight.
-- you may not be aware of -- but there's movement every month every two months it it can change very quickly what do you do in a case like that.
Well they are the hope would be that you -- the company in part because they have a deep bench.
So for example firms like fidelity and T.
Rowe Price they use analytical teams and typically they're moving people up so.
When they have that -- you've got a guy who's already got a management track record you can see is running the same kinds of assets.
And if you're feeling -- it's the same kind of assets are similar and there's a reason to expect things to be okay then you know you're gonna give it a fairly long leash through the transition period.
If on the other hand you're -- -- When -- is -- they just promoted got no track record or comes from a bad fund.
-- gonna say you know six months that the outside if you can't show me something bad time to go.
-- -- -- a lot of people like to buy the fund because of the manager but the reality as.
Past performance is no guarantee of future returns even if they have a stellar.
They can't fall apart we've seen it happen before I think a Marty Whitman -- that third avenue value find that certainly happened there what he's set.
Well I mean that perhaps their greatest example of all Bill Miller who had the long streak of beating the S&P each year.
At a course.
What it is is that you want to make sure that you're not buying the manager necessarily just because you've confused a bull market for brilliance -- I think you've got to make sure that you're taking a look at going.
Is this manager truly tested and what's there in terms of support.
If there's no support well then you're at a spot -- -- saying -- this manager goes I'm buying in knowing I might be ready to go so if you.
Bought a fund where it's got the managers last name on it.
You gotta be assuming that maybe when that managers no longer running things you're gonna put him on a very shortly east but under any circumstances.
Don't let -- just because somebody was brilliant once doesn't mean they're always going to be brilliant.
Though mutual fund world is littered with fallen angels guys who made the cover money magazine or -- -- -- personal finance.
And then they felt a lot of.
Her hair done you know that smartest thing we learned here I think is Duncan's.
Don't confuse a bull market with brilliance of two things can be very very different chuck thanks for coming on tonight good to see you.
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