Few fund managers have successful careers lasting decades.
Old fund managers, like all soldiers, never really die. Some press on, year after year, consistently outperforming their younger rivals. Others think about retiring, then think again. Others reinvent themselves as sons of the soil, but find old habits die hard.
Managing a fund sounds like a dream job. You spend your time hunting down stock opportunities, then invest in them with somebody else's money. You meet a fascinating range of hungry, driven (and sometimes desperate) individuals who are delightfully friendly because them want your funds. You fly the world. Eat nice lunches. Drink gallons of the finest Chablis. You also earn a fat salary, maybe with whopping performance fees on top, and enjoy a £3m retreat in the country.
The job is exciting, intellectually challenging and financially rewarding, a rare combination.
I'd love to be an emerging markets manager in, say, Latin America or the Far East. That's my dream job. Except I've just read an interview with Graham Birch, formerly of BlackRock, and discovered that just like every other dream job, it ain't all gravy.
Could you manage money forever?
In January, Birch quit his job running five commodities-related funds to grow cows somewhere in the English countryside (you do grow them, don't you?). Now that isn't my dream job.
But after 15 years managing natural resources funds, he'd had enough. Managing $40 billion of other people's pension money is a stressful job, the responsibility exhausted him. The crunch came when he realised he had attended every Rio Tinto (LSE: RIO) results presentation for the last 25 years. The cows were calling. He is much happier now. And, coincidentally, he also thinks agriculture is a great recovery play.
Yet for some fund managers, 15 years is a mere trifle. Anthony Bolton ran Fidelity Special Situations for 28 years, from 1979 to 2007. Neil Woodford has helmed Invesco Perpetual High Income since October 1988. That's over 20 years. Hugh Young has been managing Aberdeen New Dawn since 1989 (and returned 94% in the last 12 months). As you may have noticed, these managers all have one thing in common: they done good.
Old 'un and a good 'un
One argument in favour of investing in long-serving managers is that you don't get to be a long-serving manager unless you are very good. If you underperform eventually somebody will get tired of you (unless you work for a covert-benchmarking fund offered by a high street bank, when you will have fulfilled your brief).
The drawback of picking established managers is that you miss out on the glory years when they made their reputation. You really wanted to invest in Anthony Bolton back in 1979, rather than in 2010.
Another danger is that by sticking with the tried and trusted, you can miss out on hot new talent. As my father says about sport: "A good young 'un will beat a good old 'un." The difficulty, of course, is working out who the good young 'uns are. The good old 'uns are easier to spot.
If you are choosing an old faithful, such as Neil Woodford, you have to be faithful in return. Everybody loves Neil Woodford, although if you judged him over the last 12 months, you wouldn't be so starstruck. Over 20 years it's a different matter.
Never say Ever again
Patrick Evershed was a fund manager for 40 years. I had lunch with him nine years ago when he was a big star at Rathbone Special Situations. When New Star was hoovering up fund management talent a long decade ago, they selected him to run New Star Select Opportunities, which launched in May 2002. The £60 million fund flopped. I know, because I invested in it.
Evershed, 67, quit New Star in September 2008 claiming constructive dismissal for bullying, after a nasty fall-out with New Star founder John Duffield. Fund managers don't just rely on their own talent, but the backing of their bosses. Like good wine, they don't always travel.
A bull in China
Let's hope Anthony Bolton travels better, now that he has relocated to China. I was surprised by the negative reaction when he announced his comeback from retirement with Fidelity China Special Situations. Many analysts were highly sceptical, suggesting Bolton had forgotten one of the great lessons in life: Quit while you're ahead.
He is certainly putting his reputation on the line, or rather, on the back of a potential bubble. If China is about to go pop, as many people suspect, his reputation will irretrievably burst. This won't just be a mildly embarrassing footnote to his glorious career, it will be the banner headline.
Bolton is a brave man.
Not fade away
Fund managers aren't immortal, of course.
Estonian-born Nils Taube fund manager ran his own fund for 35 years, delivering an average annual return of 15%. He made his money and his name investing at the bottom of the market during the 1970s slump, when everybody else was stockpiling candles. In 1974, friends called him "irresponsible" after he spent the last £2,000 of his children's trust fund on share such as Hoover and Royal Dutch Shell (LSE: RDSB), which subsequently rose 125 times. He also famously spotted -- and shorted -- the 1987 stock market crash.
Taube, who said investing was "like being paid for doing the crossword", died aged 79 after falling ill at his Bloomberg terminal at 7:30am. Fund managers do eventually die, but they don't fade away.
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