I have got many queries about fund manager changes. For me SNL quitting L&T Mutual fund is new, but a fund manager quitting a mutual fund is not new. I have seen fund managers retiring (Franklin Templeton), fund houses quitting the country (New York Life), Fidelity, AMP, Morgan Stanley, Goldman Sachs…). So for most of us who have been around for a quarter of a century, this is not new.

Gopal Agarwal quit Mirae Asset Managers. However the fund house handled it well. They immediately went to the press and said “GA has quit…and this is what we will do”. It is the duty of the CEO, the directors, the management team and of course the trustees duty to do all this. Mirae surely did it well. Proper communication is the most important thing in a fund manager exit. Communicating to the IFA, bankers, national distributors is necessary. They are the people who will carry the communication to the investors. So IFA communication, investor communication etc. has to be handled well.

Even when Nagnath quit DSP Blackrock Mutual fund, DSP to handled the exit very well – remember he was the CEO and not a fund manager. However, it required good communication and they did handle it well.

When Sunil Singhania quit Reliance Nippon Mutual fund, the exit was surely handled well.

When Fidelity sold its fund management business to LnT mutual fund, if somebody had asked me I would have said “yes withdraw your money” . This was because the Fidelity fund management was based in Hongkong and did not join L&T Mutual fund. If you had withdrawn the money, it would have been fine. HOWEVER, if you did not withdraw, the LnT team did handle the funds well. So either way you were find. Now when SNL quits LnT Mutual fund (for whatever reasons) – you do not have to bother much. LnT Mutual fund has a head equity and a head of debt. Both have a lot of experience and should be able to handle their jobs. It is not clear whether they will get a new CIO, and many IFA are waiting for a clarification form the LnT management team.

Most of these cases are when a CIO quits. When Manish Gunwani quit Icici Prudential mutual fund, Naren Sankaran stepped in to handle the funds. This was a little different – the CIO had to handle the exit of a fund manager, and this was easier. So Naren controlled the style and new fund managers were asked to take over the actual running of the fund.

Franklin Templeton handled the exit of its fund managers – to retirement apart from the usual resignations and promotions.

Now we find big fund houses like Icici Prudential and Franklin Templeton (I have not seen any other fund house do it, happy to be corrected) are using two fund managers for each fund. In such a case the exit will be far easier to handle.

I have not seen any communication from LnT Mutual fund – but I hate to admit that I may not be in their mailing list! It is important that the communication be handled well. I do think that the new fund managers will handle the fund well.

I like the new initiative by Kalpen of Dsp. The fund managers make their Investment Philosophy statement and this broadly controls 80% of the portfolio. This statement is likely to be a good handover statement – the new FM knows the logic of every scrip. At least broadly if not very closely.

So each fund house finds some way of handling fund manager exits.