While it is said that you should invest and forget about your equity holding, there is merit in regular evaluation. You should consider exiting a scheme if there are certain changes within it.
Fund manager
A change in fund manager of a scheme is usually a red flag. Though fund house processes have an impact on overall strategy and fund management outcome, there is a lot of weight attached to an individual fund manager’s stock picking ability and discipline.
But all changes needn’t draw an immediate reaction to exit and follow the manager.
If the fund manager has moved to another fund house in the same position as held previously, question the reason for the shift. Has it come on the back of certain corporate changes and senior management shifts? If yes, then that is a cause for concern. Too many changes can lead to interim instability in scheme performance as the management’s attention gets diverted, or new people coming in may have a different strategy. It’s best to exit in such cases or reconsider the scheme a year or two down the line.
If the change is more about elevation of the existing fund manager to a bigger and more strategic role, look at who will take over. Usually, fund houses have a succession plan. Often, the person taking over is a co-fund manager. In such cases, there is merit in remaining invested. Similarly, if a fund manager retires from active professional life, look at the succession plan.
