Summary of The Aftermath of Fund Management Change

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The highly publicized departures of well-known mutual fund managers like Bill Gross at PIMCO highlight the fixation the media and investors have on the importance of the leader at the helm of a fund. But in this succinct, accessible study, Morningstar researchers Madison Sargis and Kai Chang find that the success of a fund does not depend on a single individual but rather on the team-driven approach that now dominates the industry. getAbstract recommends this eye-opening, useful report to investors and financial professionals.

In this summary, you will learn

  • How investors react to news of a high-profile management change in a fund,
  • Why a leader’s departure has no effect on a fund’s returns and
  • How the team approach to investing influences fund performance.

About the Authors

Kai Chang is the director of quantitative research at Morningstar, where Madison Sargis is a quantitative analyst.



Now and then, a high-profile fund manager’s departure receives media attention, and huge cash outflows from that fund often ensue, the result of investor worries about future performance following a star manager’s leave-taking. But are those concerns warranted? Researchers interested in understanding investor behavior examined the returns of “US actively managed equity and fixed-income funds” that had experienced some shift in personnel between January 2003 and December 2016. The data show no relationship between a manager’s leaving and a fund’s future returns. The findings apply across the spectrum, regardless of a fund’s size, risk and return, or managerial tenure.

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