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Star manager or team: what’s the better choice?

Barry Norris, who runs two European equity funds at Argonaut Capital Partners, a company he co-founded in 2005, is a good example of a manager with a strong personality-driven style. Since inception, both of his funds have outperformed the MSCI Pan-Euro Index by quite a margin (see graph). According to Norris, this outperformance is the result of his own distinct investment philosophy, which is focused on finding companies where the market is significantly over- or underestimating future profitability.

“I attribute my success and, more importantly, the consistency of my success, to my investment process, which has been almost entirely self-taught,” he says. But what happens if Norris is out of action? He says that never happens. “As long as I have access to a phone or computer, I communicate with the rest of the investment team every day even when on holiday or ill,” he asserts. “Our clients have trusted me personally with their money and I take that duty of trust very seriously.”

Taking a longer-term view, could Norris actually make himself dispensable? He says he is making an effort. “The investment process could be replicated by others; indeed that’s what we are trying to achieve internally,” he says. However, at the same time he is making an honest reservation. “Whether every individual is able to execute the process with the same degree of success is another matter.”

The power of a team

John Surplice manages the Invesco Pan European Equity Fund, and in this role he is one of a couple of managers in the fund house’s European equity team. Surplice has, like Jeroen Vetter, a strong preference for the team approach to fund management. “If you ask me, the concept of a star manager is a bit of a joke. No one person is the fount of all knowledge. It presumes there is some God-given ability at play,” he says.

Surplice used to work with Neil Woodford at Invesco, the manager who now successfully runs several billion sterling in his own UK equity fund, and one of the people who probably comes closest to personifying the idea of a star manager, especially in the eyes of UK-based investors. But even he is not a magician, says Surplice. “In the end it is all down to hard work. Neil was always the first one to come into the office.”

Part of the Mark Allen Group.