If you had invested in his Lazard Income fund in spring 1998 and decided to stick with him, you would have racked up charges for switching – as much as 5.25 per cent each time – over the past four years to follow him to HSBC and later Cazenove.However, many in the industry believe that gifted managers deserve their loyal following. Nick Greenwood, head of investment at portfolio manager Iimia, says: “Good funds are very often controlled by one person. There are very few individuals who are very effective.”Alan Adam, a consultant at IFA Alan Steel Asset Management, agrees: “We have always been big believers in star managers’ value. They can make a fund.”He believes the team approach, where a number of managers work together on decisions, shows a lack of confidence in individual skills and a fear that money will leave with any departing manager.The cult of the star manager has focused the spotlight on past performance figures – and particularly the high returns that may be attributable to one person’s stock-picking expertise. In these situations, investors should beware: they may be looking at a “ghost performance” achieved by long-departed managers.”You need to know where performance has come from,” warns Meera Patel, senior analyst at IFA Hargreaves Lansdown, who adds that even stars aren’t immune to misfortune: “You have to expect that, from time to time, every manager has periods of underperformance, and certain times you will get caught up in stocks that don’t perform.”Sue Whitbread, director of IFA Chartwell, says that if you are determined to follow a manager, it’s best to shop around among brokers and IFAs.

Investors have to pay an initial charge, typically 5.25 per cent, for going into a new fund. However, if you invest via an IFA on an execution-only basis, or use a fund supermarket such as Fidelity’s Funds-Network, they should be able to negotiate a substantial discount.. If Gordon Brown gets his way, UK home buyers will in future choose long-term fixed-rate mortgages, over 25 or 30 years, instead of short-term fixes and discounted deals. Back in April he commissioned Professor David Miles of Imperial College London to look at the feasibility of establishing a market for longer-term mortgages, which are prevalent in the US and on the Continent.But while Mr Brown believes these deals will reduce vulnerability to sharp changes in interest rates, mortgage brokers are not convinced they will be popular in the UK.”The Chancellor has had two big ideas for financial services: CAT-standard mortgages – which few lenders [offered with any real success], apart from the Nationwide – and stakeholder pensions, which have also been a failure,” says Ray Boulger, senior technical manager for mortgages at broker Charcol.

“Is he going for a hat-trick?”David Hollingworth at broker London & Country also feels that fixes longer than five years aren’t likely to be popular.”I am not sure in what way long-term fixed-rate mortgages are supposed to stabilise the housing market,” he says. “They will stabilise people’s repayments but not the supply of housing or the level of employment, which seem to have more say in whether the base rate goes up or down.”Introduced in the late 1980s, mortgages fixed for 25 years are not a new idea in the UK. But they haven’t taken off because the rates have been uncompetitive compared with shorter fixes, and they have carried too many exit penalties, making them inflexible.Lenders will only be persuaded to offer more competitive rates on longer-term fixes if they are forced to, if the Government provides tax incentives or if it subsidises the market – all of which are very unlikely.”On odd occasions, 25-year fixed-rate mortgages have sold well, but only when they have offered very competitive rates,” adds Mr Boulger. “They will never sell in huge quantities.”He can recall two successful 25-year deals.

The first was from Bear Stearns, which launched an 11.95 per cent 25-year fix at the beginning of 1990 with no penalties. That rate may sound high now, but it was extremely competitive at the time.The other successful 25-year deal was Standard Life’s 6.25 per cent capped rate, which was introduced in June 2000 with penalties for the first five years only. At the time it was introduced, it was cheaper than five-year fixed-rate deals, hence its popularity.There are a couple of competitive 25-year fixes around at the moment. Cheshire Building Society last week reduced its rate from 5.49 to 5.14 per cent, making it the market leader.