The most crucial aspect of investing in mutual funds is the management of your portfolio. The management of your portfolio, let alone be the bonds, stocks, or any other asset class- management comes up to be the topmost priority. Now, you have got to know that a fund is either managed actively or passively by the fund manager. The way the fund is managed by its manager does quite play an impact-full role in the performance of the fund. It’s fair to say that the role of the fund manager is a central point in the making or breaking of your portfolio. This being said – you’d want to know more about it. All we have to do is find out, so let’s do it.

The Part a Fund Manager Plays in Your Investments

When you choose to invest in mutual funds, it involves constructing a portfolio of securities. And, most importantly, it’s your fund manager that does the research and analysis, making big-time decisions about buying and selling. Your Mutual Funds portfolio can be managed either, actively or passively, as already mentioned.

If you have a portfolio that is passively managed, it’s based on the established index, and the content is chosen with the underlying index in mind. Well, if it is an actively managed portfolio, the manager is the one that picks the components of the portfolio. Now, you would know the part the fund manager plays as a decisive role in the performance of your actively managed mutual funds.

Let’s get a little more of the bird’s viewpoint, shall we? Here we will look at all of the duties that a fund manager takes up and how they turn out to earn money.

The Job Role and Duties of a Fund Manager

Compliance

A mutual fund manager has to comply with all of the regulations and the rules that have been set up by SEBI and other authoritative bodies. The rules include everything. Everything in the sense, signing clients to handling redemption. Over that, the manager is also accountable to answer the legislature and investors in the case of noncompliance.

Monitor

Mutual funds can never be left on the table without someone monitoring them. A fund Manager takes up that task. Merely investing in the stock or making a portfolio is not the end of the process. The manager, along with his team, takes up the job of timely evaluation of the market, economical factors, and company-specific analysis to make sure that the fund performs well and the NAV in Mutual Fund stays favourable. He monitors and rebalances the portfolio to make adjustments to the changing market. Also, it becomes his job to make sure that the returns are above the interest rates and inflation rates.

Oversight

A fund Manager has quite a load of duties that he needs to overlook and has to fulfil with respect to managing funds. Everything that happens with the investors and the mutual funds goes through him.

Outsourcing and Hiring

The fund manager, as already said in the point above, has a large number of duties to overtake and oversee. Some of these duties also include hiring and outsourcing. He employs teams to perform research and give insights. He is also an active participant in the hiring process for the required personnel and agencies.

Reporting

Would you stay without any update on your mutual fund investment? Obviously, you wouldn’t. The fund manager, in regular time schedules, has to report the performance, the investment plan, and strategy if any. These reports are the ones that help you with evaluating and analyzing the performance of your fund.

Protecting your Wealth


Fund managers strive on this aspect. They work with the objective of protecting your wealth. You know that good returns come with a certain amount of risks. It’s a fund manager’s job to take up calculated risks that are backed by extensive research and due diligence. In order to protect your wealth, the fund manager employs risk management techniques and investigations. And with proper diversification, he makes sure that market fluctuations cannot highly affect your portfolio.

businessman investment consultant analyzing company financial report balance sheet statement working with digital graphs. Concept picture for stock market, cash, fund,and business economy flow.

How does a Fund Manager Make Money?

Without any delay, let’s get to how fund managers make money. Most fund managers actually work with or as fund management companies and get their money through that. But how does a fund management company make money? We’ll tell you.

When you invest in a mutual fund, the fund house will charge you a certain amount of annual fee to help you manage your money. This annual fee is called the expense ratio, and it covers all of the expenses that include management and operating expenses. So, the expense ratio is also inclusive of the salary of the fund manager and who is managing your money.

This is how they make money.

A fund manager, without a doubt, plays a great role in your investment. But you know what the tricky part is, how to choose one that will help you get to where you want to go. Don’t worry, we have got you covered.

How to Choose a Fund Manager

Investing in mutual funds? Then you know the captain of the ship for an actively managed fund. The Importance of sound selection criteria and past performance is directly proportional to your success. And you know the fund Manager does that job. But finding the right one for you, you have got to consider the following points to know ‘the right one.’

  • The Investment Style
  • Experience of the Manager
  • Is he the First Mover?
  • How well is the team’s market research?
  • What is the investment horizon?
  • What is his track record?
  • The performance of the managed funds.

Once you know all of these, it is much easier for you to come up with the right manager and end up with a great mutual fund portfolio.

Conclusion

Everyone wants world-class managers on their funds, but it comes back to what kind of an investor you are, which sector you are focused on and so much more. Choosing your fund manager must firstly start at your investment goals.

Image Source: BigStockPhoto.com (Licensed)

Site Disclaimer 

The Content in this post and on this site is for informational and entertainment purposes only. You should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation, endorsement, or offer by HII or any third party service provider to buy or sell any securities or other financial instruments.

Nothing in this post or on this site constitutes professional and/or financial advice. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content in this post or on this site. 

You recognize that when making investments, an investor may get back less than the amount invested. Information on past performance, where given, is not necessarily a guide to future performance.

Related Categories: Jobs, Money, Reviews