What Is a Fund Manager?
As a fund manager, I implement the fund's investing strategy and manage its portfolio trading activities. You might see one person handling this, or co-managers, or even a team of three or more.
I get paid a fee based on a percentage of the fund's average assets under management (AUM). You'll find me working in fund management for mutual funds, pension funds, trust funds, and hedge funds.
Key Takeaways
I oversee mutual funds or pensions, manage analysts, conduct research, and make important investment decisions. Most of us are highly educated, hold professional credentials, and have management experience.
We fall into two categories: active managers and passive managers. My main duties include meeting with my team and existing and potential clients.
The Role of Fund Managers
The main benefit of investing in a fund is that you entrust the investment decisions to professionals like me. That's why we play a key role in the investment and financial world—we give you peace of mind knowing your money is with an expert.
A fund's performance depends on market forces, but my skills contribute too. A highly trained manager like me can lead the fund to beat competitors and benchmarks—this makes me an active or alpha manager. If I take a backseat, I'm a passive fund manager.
I generally oversee mutual funds or pensions and manage their direction. I also handle a team of investment analysts. You need great business, math, and people skills for this job.
My main duties include meeting with my team and clients. I'm responsible for the fund's success, so I research companies, study the financial industry and economy, and keep up with trends to make decisions that align with the fund's goals.
Responsibilities of Fund Managers
I primarily research and determine the best stocks, bonds, or other securities to fit the fund's strategy as outlined in the prospectus, then buy and sell them.
At larger funds, I have a support staff of analysts and traders who handle some activities. In some companies, multiple managers oversee client money, each responsible for a portion or deciding via committee.
Other responsibilities include preparing reports on fund performance for clients, developing reports for potential clients on risks and objectives, and identifying good client fits.
The Path to Fund Management
To qualify for fund management, you need high education, professional licenses, credentials, and investment experience—this applies to mutual funds, pension funds, trust funds, or hedge funds. Look for long-term, consistent performance where the manager's tenure matches the period.
Most of us pursue a Chartered Financial Analyst (CFA) designation first to become the head stock-picker. CFA candidates undergo rigorous coursework in investment analysis and portfolio management.
These analysts assist portfolio managers with research and recommendations. Familiarity with operations and style helps after several years, and successful CFAs can get promoted to manager.
Active vs. Passive Managers
Active managers like me try to outperform peers and benchmarks by studying market trends, analyzing economic data, and staying current on company news.
We buy and sell securities based on this research for greater returns, charging higher fees due to our proactive role—many mutual funds are actively managed, hence high fees.
Passive managers trade securities held in a benchmark index, applying the same weighting to mirror returns rather than outperform. Many ETFs and index mutual funds are passive, with lower fees since less expertise is involved.
Notable Mutual Fund Managers
One iconic manager is Peter Lynch, who piloted Fidelity's Magellan Fund from 1977 to 1990. He selected stocks in comfortable industries, achieving 29% average annual returns, growing AUM from $20 million to $14 billion.
Albert 'Ab' Nicholas founded the Nicholas Company and ran the Nicholas Fund from 1969, besting the S&P 500 from 2008 through 2014.
A Hedge Fund Icon
Ken Griffin's Citadel Global Equities returned almost 6% after fees in 2018. With a 2024 net worth of $37 billion, he started trading from his Harvard dorm in the 1980s and launched Citadel with $4 million in 1990.
What Makes Up a Portfolio?
An investment portfolio is a group of assets designed to balance risk and address your goals. It typically includes bonds and stocks, but can also have real estate, minerals, or other assets—the objective is balance.
What Is a Hedge Fund?
Hedge funds differ from mutual funds by requiring large minimums from accredited investors. They focus on aggressive investing, including short-selling and leverage in wider markets.
What Is a Trust Fund?
A trust fund isn't technically an investment fund but often includes investments. It holds assets for eventual beneficiaries after the grantor passes away.
The Bottom Line
A fund’s performance depends largely on market activity, but a qualified manager like me handles it to shield and benefit clients. We typically oversee pensions and mutual funds. You should fully review my investment style before investing.
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