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How Pivotal a Role does Managers Play in Goal Achievement?

The new Premier League season in England is underway, and one of the main topics of conversation is the impact that the change in managers may have on the success of the teams this season. Football pundits are abuzz with what the return of the “Special One” will mean for Chelsea; what the first season in almost 30 years that Manchester United take the field without their, some would say, irreplaceable manager Sir Alec Ferguson, will mean for the club; what the quiet but big spending new manager across town at City will achieve; whether the existing Arsenal manager, Arsene Wenger, is “past his sell by date”, an opinion held by some due to the lack of investment made by him during the off season. It is clear that the manager is seen as pivotal to a teams’ success or failure and it is the manager that, time and again, has taken the fall for the latter.

So, I find it surprising and slightly concerning that, when it comes to collective investment schemes, when looking at the past performance of a fund in order to decide whether to entrust it with one’s own, or one’s clients hard earned cash, we are not more frequently asking the question “is the current manager the one that achieved this track record?”. For all we know, the current manager may have only recently taken over the fund or is, as some believe of Mr Wenger, no longer managing effectively and new blood might be beneficial.

I am certain that anyone analysing Manchester United’s prolific track record under Sir Alec, knows that this cannot possibly be attributed, in any way, to David Moyes and so it follows that, if we were attempting to predict the future success of the team, we would not base our expectations on the team’s track record as much as we would base it on what we know of the capabilities and track record of the new individual now in charge.

Which begs the question – how many of us can say that we are as certain of who was responsible for the track record of investments we are considering, as we are certain that David Moyes had nothing to do with Manchester United topping the Premier League table 13 times.

And, for funds currently held, be it directly or on behalf of clients, how many investors and/or advisers are using the news of a manager change as a trigger to review their investment plan, to learn what they can about the new manager and what they might hope to expect from him or her and, if necessary, adjust their thinking in respect of investment in the relevant fund as a result.

Basing a decision solely on one individual as to which investment or indeed, for that matter which Premier League team, we expect to be the most successful over the coming year, is certainly not what I am advocating here as, amongst many other factors, the infrastructure that surrounds that manager is also a very important factor that should not be ignored. Equally though, the individual can also not be ignored.

Having the information at our disposal to enable us to determine how much influence an individual, currently in charge of a fund, actually had on the published track record of that fund, should be something that we encourage industry players to make readily available, be this via their fund factsheets and/or other communications, to advisers, investors and prospective investors.

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