Is the “Superstar Fund Manager” Finished?

by | Oct 2, 2014 | News

By now you’ve likely heard about Bill Gross leaving PIMCO for Janus. It was absolutely huge news last Friday, and people all over the investment industry have been discussing it for almost a week now. In situations like these, everybody likes to chime in. Most of the stories have been reiterating the same group of points, but one that stood out to me was written by Ben Carlson.

On his blog, A Wealth of Common Sense, Ben shared interesting thoughts on the bigger picture implications Gross’s departure might have on the industry.

“To me these stories could mark the beginning of the end of an era — that of picking a handful of star managers to build a portfolio around. I’m not suggesting a complete shift right away from actively managed funds by any means, but things are slowly heading in another direction from the way active funds are currently structured. I’m not going for hyperbole by suggesting a sudden paradigm shift or a groundbreaking end of an era marked by Bill Gross exiting PIMCO. You can’t turn the battleship around that fast.”

So Ben moves the conversation from Gross to a larger trend, which he sees as an ongoing shift away from the superstar fund manager. This shift is happening, although I agree that it won’t be an overnight transformation.

You can read the rest of Ben’s article (which I highly recommend doing) here:

Ben’s point is one that resonates with us here at Mullooly Asset. We’re advocates of rules based investing systems. We’d rather see investment decisions made in a methodical manner that isn’t clouded by human issues like emotion, mood, feelings, or pressure. In short, a systematic approach that follows set guidelines without deviating from them. A mutual fund manager is only human after all, even if their 5 year track record looks amazing.