JPMorgan Chase & Co. (JPM), Wells Fargo & Co (WFC), Citigroup Inc. (C): The New Mutual Fund Danger

And in with the new

So does a manager departure mean it’s time to bid adieu to your mutual fund? In many cases, yes. If the new incoming manager doesn’t have a verifiable track record running money in the same style and with the same objective as the current fund, you should think twice about staying put. There is certainly the chance that the new manager could exceed expectations, but without a proven track record, there’s not much for fundholders to hang their hats on. You should demand to see proof of success before you commit your money.

However, not all manager switch-ups mean that you need to hit the sell button. If your fund is run by a team of portfolio managers, one person leaving that team is unlikely to result in meaningful changes to the fund’s investment process. Firms like Dodge & Cox utilize a multimanager structure so that any one person’s departure won’t affect the fund. Likewise, if the new manager or management team has an extended history of investing similarly and has a prior track record of success in multiple market conditions, you can probably rest assured that they will continue to shine at their new charge.

Manager changes are always a catalyst to review your reasons for owning a mutual fund, so keep up to date on who is running the show at your funds and don’t be afraid to cut your investments loose if need be.

The article The New Mutual Fund Danger originally appeared on Fool.com and is written by Amanda Kish.

Amanda Kish is the Fool’s resident fund advisor for the Rule Your Retirement investment newsletter. She has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Wells Fargo. It owns shares of Citigroup and JPMorgan Chase. 

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