The future, of course, has a habit of surprising us, and it's impossible to anticipate performance. And there might also be other factors in an investor's decision to leave with the manager. Sometimes the tax implications of leaving are more important. Selling a fund and triggering a hefty capital gains tax may be unwise, regardless of whether you have misgivings about a new manager. Taking into account the tax adjustments, it might be less costly to keep the fund.
If you stay with a fund after the manager leaves, pay extra close attention to risk and return in the portfolio under the new regime. Fund companies may say they're not going to change the strategy, but sometimes they break their promise, Kinnel says.
Don't forget that you're in control. There's always the fail-safe choice: sell. The liquidity of these funds offers an escape hatch if the reasons for staying put aren't persuasive, says Michael Kitces, director of research at Pinnacle Advisory Group. "If there was a magic button that showed me everyone who will earn 100 basis points of alpha, we wouldn't be having this conversation," he says. On the other hand, "it's not like you're signing up for five years." These aren't hedge funds. There are no lockup periods or transparency issues with mutual funds and ETFs.
"The people who really spend a great deal of time investing in active managers tend to have a pretty good clue about their active managers," says Kitces.