September 11, 2014

Stars are not Born (Including Star Fund Managers)

Sadique Neelgund


This article is inspired by the comments that I read in a top selling Business Magazine recently in which most Mutual Fund CEO’s, non-achievers in general spoke on how their fund houses are process driven and do not dependent on individual Fund Managers.

Those who do not rise cannot fall

This article is for the benefit of those who have achieved something by their own efforts, have become stars in their own fields by achieving more than what a normal person in that profession would achieve and as a result of that all their performances come into the public eye. They need to be top performers all the time; otherwise they will be criticised for not meeting the standards that they have set for themselves.

I start off by my personal achievements because of which the media and the financial services fraternity categorized me as a “ Star Fund Manager ”. Now I was not born as a strong performer. It was due to my own efforts, my learning’s by making huge efforts without much guidance and also due to my ability to take risks which were contrarian to the current way of thinking that I outperformed most other funds right from the year 2003 till 2007 in the Mutual Fund Industry.

At that time there was a huge coterie of MF professionals including a few CEO’s of underperforming Mutual Funds who would go around the entire market place making presentations on how they were CEO’s of process driven fund houses and do not rely on “Star Fund Managers”. Most of these people tend to be underperformers who have not achieved much in life or those who have climbed up due to abilities which might not fall into the professional achievement category.

Most of these people live on the reflected glory of the performance of their Fund Managers. When the Fund Manager is doing well and the AMC is showing growth it is always a team effort. When performances slips and growth slips the responsibility lies with the Fund Manager.

What does a process driven fund house mean?

It just means that there is an investment process. However the final call to buy, sell or hold is always of the Fund Manager. Otherwise why would the performances of the so called “Process Driven Fund Houses” also fluctuate at regular intervals from being in the first quartile to the last quartile and vice versa? The reality is that all over the world it is recognized that the ability of the Fund Manager is of primary importance to the performance of a fund.

I have explained the impact of personalities via the example of the industry in which I have worked in. This is true across industries and across countries. CEO replacements in even large companies lead to those companies doing better or worse. Everyone would be following what is happening in Infosys today. It is an organization with over one lakh employees, hugely process driven. However lack of leadership post Nandan Nilekani has led to dis-satisfaction, an attrition rate that is double that of TCS and below par performance. A dynamic leader could change all of this.

The biggest example is that of what is happening in India today. With the change in leadership at the Prime Ministers level the entire confidence level has gone for a change. Would this have happened if it was anyone but for Narendra Modi? What better example than RBI, a totally process driven organization. However entry of Raghuram Rajan has changed the entire working style, profile and proactiveness of the Central Bank, increase confidence in the INR and on India in general.

Even in team sports like football, Cricket and Hockey there are players who stand much above the others in terms of abilities. Obviously these stars cannot win alone but there contribution increases the team ability many folds. They need rest of the team to excel but the team becomes excellent primarily because of them.

Who does not have bad times

Didn’t the Superstar of the Millennium Mr Amitabh Bachchan have a really horrid time in the 1990’s when nothing seemed to work for him? He also lost lot of money and owed money to banks in his business venture ABCL. He had to use the Television Route of Kaun Banega Crorepati to bounce back and come back into the movies circuit again. It was his hard work, dedication, an ability which is more than others and a need to excel that brought him back. He did not become a Star because he wanted to; he became a star due to his achievements which were better than most others.

There are several other examples of the same in various fields. There have been sportsmen like Yuvraj Singh who have been huge stars and have had very rough patches. He was able to bounce back as he wanted to perform at the top level again.

Playing politics to move up the ladder can only work till a certain level. Subsequently it is only your competence which will help you sustain. Unless, of-course you are working in a Public Sector company where the exact reverse might hold true. Pioneers in different fields who have become stars in their respective fields have had the ability to see things differently than others. People like Steve Jobs, Bill Gates, Mark Zuckerberg etc fall into this category.

The Secret to become a Star

The key requirements to become a star in any particular field in my view have to have the following abilities.

  1. A thinking process that is very different from others which helps a person take calls that others might not.
  2. A personality which makes everyone take a view on the person. Love him or hate him.
  3. A skill set in their respective field which is not easily replicated. For example in the field of investments everyone wants to become a Warren Buffet by following the investment philosophy that he talks off. However no one till date has been able to do so.
  4. An ability to look into the future and recognize trends that will emerge, not necessarily today but tomorrow and into the future. Either recognize what people want today or what they will want tomorrow is necessary.
  5. Innovate, go beyond the obvious and have a risk taking ability higher than others.
  6. Most importantly an ability to bounce back from defeat or failure. This requires confidence in one’s own ability and a positive thinking process which can help keep the past behind and live in the present and the future.
  7. An ability to keep on trying despite repeated setbacks in order to meet the destiny as per one’s ability

Though different fields might require a different set of abilities I do believe that the above mentioned ones are essential irrespective of the field of work.

I will rest my case here with the closing comments being the fact that the effort require to climb up the stairs in adverse circumstances can never be appreciated by those who stand down and watch the climb or try to pull down those who are above.


Authored by

Sandip Sabharwal

Sun Capital

One response to “Stars are not Born (Including Star Fund Managers)”

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