Only 20 of 320 Active Fund Managers Have 10+ Years of Experience: Why Investors Should Look Beyond Past Returns

Long Track Records May Not Tell the Full Story

Investors often shortlist equity mutual funds by looking at five- or 10-year returns, consistency and performance against the benchmark. However, a fund’s historical performance may not necessarily reflect the decisions of the person currently managing it. An analysis of equity-oriented schemes shows that out of around 320 active fund managers, only 20 have managed a scheme for more than 10 years, while just eight have crossed the 15-year mark. This makes fund-manager continuity an important consideration when evaluating an actively managed scheme.

Average Manager Tenure Is Below Three Years

The relatively short tenure of fund managers is particularly significant because active funds depend heavily on investment decisions involving stock selection, portfolio construction, sector allocation and risk management. Across major equity categories, the average manager tenure remains below three years.

Value funds recorded the highest average tenure at 2.69 years, while banking funds had the lowest at 1.99 years. The figures underline how uncommon it is for investors to have a decade-long performance record generated consistently under the same manager.

Flexi-Cap Funds Stand Out, But Categories Differ

The distribution of experienced managers is not uniform across categories. Flexi-cap funds, for instance, had the highest number of managers with more than 10 years of current scheme-management tenure, with seven managers in this group. Value funds had the largest number of managers in the five-to-10-year tenure bracket, while large & mid-cap, mid-cap and focused funds also had meaningful representation.

At the other end, banking and business-cycle funds each had only one manager with more than 10 years of tenure. This suggests that investors should not assume that every established mutual fund category has the same level of managerial continuity.

What Investors Should Check Before Choosing a Fund

Past returns remain useful, but they should be treated as only one part of the evaluation process. Investors should examine:

• Current manager tenure: How long has the present manager actually run the scheme?
• Performance under the current manager: Separate the manager’s track record from the fund’s historical record.
• Previous experience: Assess whether the manager has successfully managed similar strategies or categories.
• Investment philosophy: Check whether the fund’s current strategy remains consistent with its historical approach.
• AMC investment process: A strong research team and institutional process can reduce dependence on one individual.
• Portfolio changes: Look for significant shifts in sector allocation, concentration or risk after a manager change.

Process and Continuity May Matter More Than a Star Manager

The key takeaway is not that investors should avoid funds with recently appointed managers. Instead, the data highlights the danger of assuming that a 10-year fund history automatically represents 10 years of experience for the current decision-maker. A robust investment process, experienced research team, disciplined risk management and continuity at the AMC can be equally important. Investors should therefore look beyond headline returns and assess whether the people and process responsible for generating those returns are still in place. Past performance remains relevant, but understanding who generated it and how can provide a more meaningful picture of a fund’s future potential.