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In the last two years, fund managers of at least 70 equity mutual funds (MFs) have moved out. The number is significant and undoubtedly worrying for an investor, who relies on active management for above average portfolio returns.

The trickiest and possibly the part that makes maximum difference to the situation is what gets done behind the scenes when a fund manager puts in his papers. Some fund houses prefer to let the fund manager leave as soon as the next day. Others prefer the fund manager to look into the portfolio and make changes needed for a smooth transition during the notice period. Inbothcasesfundhousesprefertorely more on processes rather than individual fund managers. "It is unfair to say it is a one-manshow,"saidSundeepSikka,CEO, Reliance Asset Management Co Ltd.

There is of course another side to the coin: changes that take place in new funds that the fund manager takes over. Look at the portfolio of two equity schemes of BNP Paribas after Anand Shah took over as CIO in April. According to data from data tracker Capitaline, in four months, BNP Paribas Equity Fund introduced 13 new stocks (21.2% of the July-end portfolio) and took out seven (14.2% of the July-end portfolio), whereas BNP Paribas Opportunities Fund took out 11 (13.3% of the April-end portfolio) stocks and added seven (12.2% of the July-end portfolio). It is noteworthy that the performance of both funds has shot up in the last four months.

While it is common sense that the fund manager's choice of stocks should technically play a big role in determining performance, it is difficult to allocate performance solely to one fund manager. "When a star fund manager leaves, one has to look at who is second-in-command," said Jayant Pai, vice-president, Parag Parikh Financial Services Advisory Ltd. "Those left behind should be good enough to take it up."

Unfortunately, even though there are concrete indicators, there is no scientific way to ascertain how the performance suffers when a fund manager leaves and also how long it may take for it to improve.

If the fund manager leaves, don't panic and jump ship; watch the fund performance for at least six months. Also, keep track of significantportfolio shifts. "When such an event occurs, we track the fund closely for three-six months to understand if there is any change in action by the new manager and whether he or she is replicating the good actions of the previous manager or making the same mistakes,"saidPawanJoseph,vice-president, Motilal Oswal Wealth Management Ltd Also, analyse the performance of the equity funds of the fund house you are with and of the new fund house where the fund manager has moved. A wise choice is to stick with the fund house that has a better long-term performance track record for its basket of equity funds.