Why Most Famous Fund Managers Aren’t as Good as You Think

This column stems from a conversation the writer had with a professional fund manager, who has hung up his boots and is now managing the family portfolio.

During the wide-ranging conversation, the topic veered to the penchant of mainstream and social media to create “star fund managers” and the PR and marketing engines of fund houses that fuel the phenomenon.

In investing, returns should be the measure that counts, nothing else, he told me.

Yet all too frequently, fund managers find themselves applauded less for their track records and more for the magnetism of their public personas. Social media flair, high-profile conference talks, and frequent name-dropping of investing legends tend to overshadow the steady delivery of results. This evolution from substance to style puts investors at risk of mistaking visibility for genuine expertise.

Stories Over Numbers
The allure of a compelling narrative is powerful. Fund managers craft stories of rare insights, exclusive luncheons with industry icons, and selective “invitation-only” events to tap into investors’ desire for both connection and exclusivity. 

However, the data paints a less flattering picture. Stripped of their stories, many of these so-called star managers have a hard time consistently outperforming the benchmark.

This is not just anecdotal, but a pattern backed by facts. Research from S&P Global’s SPIVA index and other independent trackers demonstrates that most actively managed funds underperform major indices over the long run, even as their managers remain entrenched in the spotlight. The problem is that investors often confuse familiarity with skill, elevating managers with a strong public presence regardless of their actual returns.

Seeing a manager featured on panels and podcasts creates a sense of authority and reliability. Yet, capital markets reward competence, not charisma. Many investors learn this lesson only after disappointing results, while the fund manager’s compensation rises and the media tour continues unabated. 

SPIVA data for 2024 show that while the S&P India LargeMidCap index gained 15.9%, 60% of actively managed Indian equity large-cap funds failed to keep pace. This figure is nearly identical to the long-term average of 61%. Over the course of three years, the underperformance widened to 75%, and over five years, it soared to an astonishing 93%, according to SPIVA.   

The idea of exclusivity is another well-used tactic, the manager told me. “Invitation-only” events and private investment circles suggest there is something special behind the velvet rope. In many cases, funds that can speak of performance need not rely on scarcity. If a fund is truly exceptional, limiting access serves little purpose. More often, exclusivity functions as a marketing tool designed to create hype rather than highlight merit.

While some managers are busy building brands, the best long-term results often come from those who keep their heads down, distilling success to disciplined analysis of cash flows, rational valuations, and a long-term holding approach. These investors aren’t headline makers or podcast regulars, but their consistency becomes clear when viewed across a decade or more.

Gullibility
Behavioural finance demonstrates that humans tend to mistake confidence and visibility for true competence. The financial media accelerates this feedback loop, spotlighting charismatic personalities because they are engaging, even when quieter “compounders” are quietly delivering better results. High visibility brings more funds to manage, which in turn perpetuates the manager’s fame, even as performance becomes secondary.

The way out is to relentlessly ask whether paying higher fees is justified by persistent outperformance. Treat every “exclusive” pitch as a signal to dig deeper, not just as a mark of quality. While media appearances and a strong public persona may be entertaining, investment decisions should rest on data rather than charisma.

The cult of the star fund manager is unlikely to disappear anytime soon; publicity has become part of the profession. But the heart of investing will always be compounding, not stagecraft or Twitter trends. As the old market adage goes, show your portfolio, not your personality.