What do you do when you hear that the “Star Manager” of one of the mutual funds you own is moving on? This is the case for investors with AGF Mutual Funds. Brandes Investment Partners, who pilot about $10 billion for AGF, has decided to break off their fund management relationship and start a new fund company in Canada. Investors are wondering whether it is better to sell and follow Brandes or hang in with a replacement.

The first thing to do is “Don’t panic.” Brandes will continue to manage the funds until the end of June. AGF has gone on a world wide search for a capable replacement and assures investors the manager will be in place before Brandes' term is over.

Fund management companies have seen it before. During the 1990s AGF lost another “Star” manager to a competitor. That manager seemed to fade into the sunset while both AGF and their competitor were able to find superior replacements. In another example we saw a “Star Manager” depart from Mackenzie and join a competitor. Since then, both funds performed very well.

It may not pay to make any reckless emotional decisions immediately. Making a quick decision to follow the “Star” could cost you money. There may be fees associated with closing your account or there may be capital gains tax to pay for redeeming non-registered money.

The most prudent course of action is to wait and see who is appointed as the new manager. One thought is to keep previously invested money with AGF and diversify new money with the new Brandes firm. When change like this occurs the best place to go for information is your trusted investment advisor. They are the ones you have hired to monitor and provide advice for situations like these.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.