While few would dispute that wisdom can come with a few grey hairs, there is a compelling case for finding good fund managers earlier in their careers. There can be a sweet spot that comes somewhere after building up enough experience to hit their professional stride, but before too many assets cramp their style or they are handed too much responsibility.
For the lucky investors that find fund managers at this moment, the returns can be exciting. They may be emerging from the shadow of another manager, handed their own fund for the first time. Or they may have thrown off the constraints of a larger organisation to start up on their own. Either way, they will be ambitious and keen to prove themselves. They are likely to be incentivised to build a strong track record and will have their own capital invested in the fund.
There are risks, however. They may not have, or it may need to be pieced together from their work on a number of funds. There may not be the comfort factor of other investors or the reassurance of a large brand name. Some fund selectors don’t get involved, insisting on a three year track record. However, others don't want to potentially miss out on a fund manager’s best years. The question is how to identify these emerging stars.