Follow the Star Fund Manager Out the Door?

Before you head for the exit, see who's waiting in the wings.

Let's say you were fortunate enough to identify a talented fund manager and stick around for the ride. What happens when your wealth builder retires or quits? It happens. In recent months, Jeff Gundlach, the mortgage maven who had run TCW Total Return Bond (symbol TGLMX) since 1993, and his co-manager, Philip Barach, left TCW to set up their own shop. Anne Gudefin and Charles Lahr, the skilled duo in charge of Franklin Mutual Global Discovery (TEDIX), decamped for Pimco. The inimitable Bob Rodriguez, longtime manager of FPA Capital (FPPTX), is taking a one-year sabbatical.

The first question to ask is, How important was the manager in the first place? If it's a one-man show, like Ken Heebner's CGM Focus (CGMFX), then the loss is critical. Fidelity Magellan (FMAGX) never really recovered after the legendary Peter Lynch called it quits in 1990. But if it's a fund in a family -- think American or Dodge & Cox -- that deploys teams of seasoned managers on each fund, then one manager's departure shouldn't make a huge difference.

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Contributing Writer, Kiplinger's Personal Finance

Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.