High-profile exits in two AMCs: Should you worry?

Kotak, and Franklin Templeton AMCs are in the midst of a shake-up. After steering Kotak Small Cap Fund and Kotak Emerging Equity Fund for close to 14 years, Pankaj Tibrewal has decided to move on. Over at Franklin Templeton, Anand Radhakrishnan, its CIO of Emerging Market Equities - India, has also stepped down. He was the long-time fund manager of Franklin India Flexi Cap Fund. R Janakiraman has taken over as the new CIO in his place. Besides the above two big changes, another of our recommended funds - DSP Equity & Bond Fund has seen a fund manager change recently. Atul Bhole, Senior Vice President and Fund Manager at DSP Mutual Fund, who has been managing this fund so far, has ceased to do so. While these are important developments, we think these key figures departing from the AMCs are not a big cause for concern. At least as of now. But before we touch upon these specific cases, let's address a broader question - Does a change in fund manager, in general, signal a decline in performance and merit excessive concern? Impact of manager shifts on performance To analyse the impact of the prominent fund manager shifts on funds' performance, we did a comprehensive study of such changes over the last 10 years, spanning mainstream equity categories in our coverage. With certain checks in place, such as the minimum three-year history of the new fund manager, we got down to 41 schemes, across 18 AMCs and 32 fund managers. The three-year performance comparison of these funds pre- and post-exit, with respective category average returns, reveals an unequivocal conclusion - you need not be overly concerned about a change in the fund manager. To provide some specific numbers (Refer to the table 'Not every wave is a storm'), the performance remained broadly unimpacted in 58 per cent of the cases. In 32 per cent of the cases, the change turned out to