Role of a Fund Manager in Mutual Funds

The Role of a Fund Manager in Mutual Funds

With the growing number of people looking for investment options, most of the investors are moving towards mutual fund.

This is because mutual fund is relatively an easy investing method. And who makes all these trading and investing easy for us in mutual funds?

The answer is Fund Manager.

Fund manager are people responsible for implementation of a fund’s investing strategy.

They manage the portfolio of the investors and decides where to invest to pull out maximum benefit.

Fund managers are a professional individual whose work is to keep eye on market trends, track policies and best performing stocks, look for economic trends and as such.

All the big asset management companies look for an experienced and performing fund manager to sell their funds.

They work hard to gain the best stocks and beat the competitors.

You might not be able to track the market and make transactions with little experience and a busy life.

But, this is what fund managers do. They sit all day long trying to manage portfolios, follow market trends, make the best out of the transactions.

There are multiple types of risk in the market naming business risk, market risk and as such.

These risks are unpredictable occurring that not even fund managers can foresee.

But, they are capable of managing the funds in a way as to minimize the loss at most.

Market risk is the most unpredictable type of risk. It is tough to ascertain as of what will happen in the near future.

However, business risk can be managed with experience and knowledge.

It is easy to apprehend the possible business risk of big companies. This is because all the data is available online. They are transparent with the public.

But, small and mid capital business are hard to read. This is because of little information present about them.

This is where we need a fund manager the most.

The fund manager here, can understand the working and plans of small and mid-capital companies by reading their statistics and discussion it with some top managements.

This way, the fund manager knows which stock will be safe and yield high revenue to invest in.

The fund manager doesn’t work alone. They have a whole team working on the market and business trend for them.

Also Read: Open-ended Versus Close ended mutual funds : Why Are They Majorly Different

This is why they can handle many portfolios at the same time.

If we compare our knowledge and capability to hand the portfolio with them, we might not be able to reach anywhere near their level.

Fund managers have sources that keep them updated about the happening off stock market.

While we might not have enough source as to know everything about the market.

This is why, investors look for experienced fund managers who are performing good.

So, if all the management and transaction of your portfolio has been carried out by your fund manager, what will you do once your fund manager quits?

Will you be left stranded?

No, it might be a little difficult, but you can try to manage your fund on your own as well.

Try to keep a close watch on market trend and performance.

If you see any risk approaching, try to divert the flow of your investment.

But keep in mind that short-term risk are capable to be overlooked. You will see your investment exposed to risk now and then.

But this is the nature of investment. So, you should look for the risk that are only short term and might transform into revenue yielding investment.

Try to read the market and act accordingly.

Though, you can choose to redeem your funds if you see loss. But be patient and analyse the chances of risk and return in possible future thoroughly.

The Bottom Line

Fund managers play an important role in determining the flow of your investment and the returns yield.

However, not all the responsibility of the performance of your portfolio depends on your fund manager.

Stock market is a subject to risk which are unpredictable most of the time.

Further Reading:

Team R Wealth

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