Why it matters if your fund manager retires or quits

While Warren Buffett is not strictly a fund manager, he was considered a/the key decision maker for buying and selling stocks in Berkshire Hathaway’s public markets portfolio, as well as buying private companies, and the success of that portfolio, an affiliation his retirement has not yet dampened.

Over the first weekend of May, Berkshire Hathaway held its first annual general meeting since Warren Buffett stepped down as CEO, and a lot of the conference was spent reassuring investors that nothing much would be changing.

The firm’s new CEO Greg Abel used part of his speech to reiterate his commitment to Buffett’s principles and maintaining the company’s culture he set in place. Indeed, the former CEO himself made two addresses to the crowd, partly to rally support for the future without him.

One of the key takeaways from the event was that people left reassured that despite Buffett no longer leading from the front, the market was confident that his guiding principles would continue to drive the business forward.

A similar message was relayed when Apple CEO Tim Cook announced he'll be stepping down in September 2026 and analysts were quick to assess how his successor John Ternus - who has led hardware engineering since 2021 - could change the course of the company’s future direction, even if they were reassured by him being the successor.

This messaging of a ‘smooth transition’ and ‘continuation’ is often the language used when fund managers announce that they are retiring from the industry or are off to new pastures, when management is keen to reassure that this won’t upset the apple cart for fear clients will withdraw their investment once that person isn’t associated with the fund.

There's a balance to be struck of reassuring that the process of generating the returns laid down by the person credited with generating them will continue while acknowledging that having a new person in charge will naturally bring some change going forward, as when the most closely trained protegee’s will have their own opinion on things.

AJ Bell’s Head of Investment Research Paul Angell says that when it comes to actively managed portfolios “investors should absolutely care if a fund manager retires or leaves”.

“The fund manager operates much like a football manager. Deciding the fund's tactics (philosophy and process), team sheet (companies invested in) and substitutions (sales and purchases). Their departure therefore has an unavoidable impact on the ongoing management of the fund.”

The concept of a ‘star manager’ was a more common industry term used to describe the likes of Terry Smith, Nick Train and former Scottish Mortgage manager James Anderson, who had – at their peaks – consistently delivered some of the highest levels of returns on the market. But as outperformance by active funds became more challenging during the past decade of volatility and US-mega cap dominance the phrase has lost some of its sparkle, especially in the aftermath of Neil Woodford’s equity income fund collapse when the industry became quick to impress a more collegiate approach versus any ‘key man’ syndrome.

In a more recent industry case study, back in 2024 when value veteran Ben Whitmore announced he was leaving Jupiter Asset Management after 18 years to set up his own firm – Brickwood – he set off an exodus chain as investors pulled millions out of his Special Situations fund. JO Hambro's Alex Savvides came in to pick up the mantle after a 16-year stint running his former fund, which saw a similar level of outflows as investors were rattled by the departures.

When this happened the AJ Bell Investments team removed Whitmore's former fund from its model portfolio solutions (MPS), with the team noting at the time “The change in manager will unavoidably result in changes to the philosophy and process of the fund in the years ahead”. They replaced it with the Man GLG Income fund, because the latter shared similar characteristics and long-term manager was still in place.

“The trick to assessing the impact of any departure is to determine the continuity/discontinuity of the change on the fund. Has the new manager worked with the departee for a long period of time (five years plus)? Is there a wider team with key inputs into decision making that will remain into the future?” AJ Bell’s Angell said.

A manager’s departure has been a catalyst for the AJ Bell Investments team to remove funds from its Favourites list.

When a trio of portfolio managers left Stewart Investors in 2025 the team dropped Stewart Investors Asia Pacific Leaders and Stewart Investors Worldwide All Cap funds from the list due to the loss of talent and knowledge resources to keep the portfolio going as it was. 

“As with many facets of selecting funds, making these assessments is more art than science, but very important for investors looking to maintain conviction in the active funds in their portfolio,” added Angell.