Portfolio manager turnover often raises a red flag to investors, but sometimes can actually be a good thing, writes Morningstar analyst Janet Yang. Although any change in management should prompt investors to dig deeper, Ms. Yang offers some examples where a change in portfolio manager can actually improve a fund’s prospects:
One Fund’s Pain is Another’s Gain. “A manager's departure may justify a fund's downgrade, but that manager's appearance at a different fund may be a positive development there.”
Keeps Things Fresh. Regular changes to team members can help keep viewpoints fresh.
Addition by Subtraction. “Sometimes less is more, such as when a fund’s top-heavy team sheds some of its members.”