Breaking up is hard to do – what to do when your fund manager leaves you

One of the attractions of investment trusts is that in many cases the fund manager stays in place for years and this continuity increases the likelihood of consistent performance. Recently however, there have been a number of high profile departures that have forced investors to decide whether to stay put or move their money elsewhere.

The analysts at Winterflood estimate that 29 investment trusts changed their management teams in 2017 and there have been further examples since. These need to be looked at on a case by case basis to identify what sort of impact they are likely to have on the fund.

There are a variety of reasons why managers move on with the most natural example being retirement. This is the situation with Sarah Whitley, who steps down from her role as head of the Japan team at Baillie Gifford at the end of April. One of the funds affected is the top performing Baillie Gifford Japan (LON:BGFD), which she has run since 1991, but her experienced co-manager will be taking her place so there is unlikely to be any significant change in approach.


Sometimes a change at the top can be a positive move, as was the case with the appointment of James Goldstone to the Keystone Investment Trust (LON:KIT) last March. Prior to that it had been run by Mark Barnett of Invesco Perpetual, but he seems to have been overloaded when Neil Woodford left the business in 2014 to set up his own firm. Since the handover, Keystone has outperformed both of Barnett’s two remaining investment trusts.

The fund management industry has also had to deal with the wider ramifications of the Harvey Weinstein affair, with one of the casualties being Sam Isaly, the Founder and Managing Partner of OrbiMed Capital, who stepped down from the group in December following allegations of harassment against female employees that have been widely reported in the press. OrbiMed is one of the largest specialist Pharma/Biotech investment firms and manages two investment trusts: Worldwide Healthcare (LON:WWH) and Biotech Growth (LON:BIOG).

Isaly was an experienced Life Sciences investor and had been the lead manager of WWH since launch, but was not responsible for the BIOG investment portfolio. His departure is clearly a blow to investors, although OrbiMed is home to an experienced 80-strong team and should be able to maintain its excellent performance record.

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Another manager to have been given the push is Philip Rodrigs, the man in charge of the River and Mercantile UK Micro Cap Investment Trust (LON:RMMC), who has left the company, “following an investigation into a professional conduct issue”, although he is contesting the allegations.

R&M has said the internal disciplinary matter “was unrelated to Rodrigs’ portfolio management responsibilities” and has not affected the NAV of the fund, although it is a huge loss to investors as he had generated significant outperformance, and this was reflected by a double-digit fall in the share price when the news was announced on February 7^th.

Rodrigs has been replaced as lead manager by George Ensor who joined the team in early 2014, but in such a niche area he will have a tough job convincing investors that he can maintain the fund’s excellent performance record, hence the precipitous decline from a large premium to NAV to a double-digit discount.