An investment manager or fund manager is the individual responsible for managing an investment portfolio on behalf of an investor. He or she is responsible for implementing suitable investing strategies and handling trading activities in the portfolio. A fund manager can be either just one individual or more than one. Fund managers receive a payment for their work, which could be either a percentage of the fund’s average assets or a pre-decided amount. His or her motive is to generate the highest return on the investor’s money.
Fund managers understand the client’s or investor’s investment goal before investing. The managers then make the appropriate investment by taking the client’s risk appetite, tolerance and financial goals, into consideration.
Role of a Fund Manager:
A fund manager should be a highly competent individual in this field. Apart from professional knowledge, he or she should also be experienced. You should look for consistency and long-term performance with a fund manager, which should match the fund’s performance in that time period. The quality of your fund manager can make or break an investment.
Some of the duties that a fund manager performs are:
- Research on various funds and stocks for any recent developments, earning announcements, to be able to earn more from a potential or current fund.
- Creating reports illustrating the success of their investments and proposing new investments that could enhance the client’s portfolio.
- Creating proposals for prospective customers helping them understand their risk appetite and tolerance, and correspond to their financial goals.
Fund managers must market their services, their experience, their connection and knowledge so that they can create a larger client base. Apart from managing their client’s portfolio, they must also interact with them personally to keep a track on their investments and provide illustrative charts and reports depicting the performance of their funds.
Evaluating a Fund Manager:
Performance of a fund relative to the target set by the investor determines how effective a fund manager is. It is important to evaluate the fund manager before making the selection. Here are some significant points that you can keep in mind while choosing a fund manager:
- Investment Style – It is important to understand the style of investment of a fund manager for a particular scheme. You must find out if the fund manager makes his own individual decisions or is there a particular process or system that is being followed by default.
- Individual or Team – You must also find out whether your fund manager is handling more than one scheme. If he has a team of analysts, then it is not a problem if there is a large number of schemes under the fund manager.
- History in Fund Management – Studying the fund managers’ history will give a better picture of the investment style he is going to adopt. Looking at funds previously managed by your potential fund manager, you can analyse whether or not his or her investment style is conservative or aggressive.
A fund manager has the capacity to turn mutual fund schemes into heroes for some investors. However lack of adequate research in selecting the fund manager can be disastrous for your investment portfolio. Analysing your fund manager is a very important call to make as you will be investing your hard-earned money.
GST rate of 18% applicable for all financial services effective July 1, 2017.