What is the Basic Role of a Fund Manager?
A fund manager makes investment management decisions for a particular fund. This can be a trust fund, mutual fund, hedge fund, or a pension fund. The manager ensures that the fund’s chosen investment strategy is aligned with the fund’s goals, and that it is implemented correctly. He also oversees the fund’s portfolio trading activities, and handles the overall operations, such as risk management and customer service matters. He may manage the fund independently, co-manage it with another fund manager, or work with a team of people to direct operations.
What is are the Main Duties of the Fund Manager?
Reporting and Compliance
One major responsibility of a fund manager is ensuring that his fund meets reporting requirements. Each fund will have different polices, expenses and risks, and these must be clearly delineated for both regulators and clients. It is up to the fund manager to present this information in a prospectus and other documentation, and to file and circulate the documents according to regulations from agencies such as the Securities and Exchange Commission (SEC). The fund manager acts as the spokesperson if any issues arise, and communicates with the regulators, investors and fund directors.
Investment Decisions
Investors rely on the fund manager to execute an investment strategy that results in growth, and which is in-line with their needs and financial goals. To achieve this, the fund manager must decide where to invest his clients’ money, while taking into account any applicable regulations. A fund manager must understand the cost and risk to capitalize on various cash flow opportunities. The minimum expected result is that the fund manager will deliver growth that exceeds both inflation and interest rates, and that justifies the client’s investment risk.
Risk Management
While there is always a degree of risk involved in investment, a fund manager remains responsible for protecting the money of his investors. The fund manager performs due diligence and research before making decisions to buy or sell assets. Such due diligence can include investigation of assets and companies, utilizing risk management tactics to assess investments, going to industry events, and more. Another way that the fund manager mitigates risk is by making sure that asset portfolios are properly diversified.
Team Administration
A fund manager may hire a team to assist him in managing the portfolio, and it is his responsibility to ensure that his staff performs these tasks correctly. For example, he might have a team of analysts that research investments and then provides recommendations for buying and selling, and staff members who handle matters such as issuing proxies or negotiating with brokers. The fund manager is ultimately responsible for his fund’s outcome and he must direct his staff accordingly.
Who can Become a Fund Manager?
Since a fund manager earns a percentage of his fund’s average assets under management (AUM) as payment, it is in his best interest to have the expertise required to successfully grow a portfolio. This includes investment managerial experience, a high level of education, and professional credentials such as a Chartered Financial Analyst (CFA) designation. Above all, a fund manager is an investment professional who is able to manage clients’ investments within a portfolio, with the goal of compliance, risk mitigation, and growth.
