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What does a Fund Manager do?

Mary McMahon
Updated Mar 02, 2024
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A fund manager is a financial professional who is in charge of an investment fund. A person in this position must handle the funds they supervise in a way consistent with their stated goals while working to maximize returns to benefit investors. People who work in these senior positions generally have extensive experience in the financial industry, including experience at various levels of the fund management hierarchy.

Funds can be structured in a number of different ways and for various purposes. The fund manager is in charge of managing both the day to day and long term operations of the fund. He or she decides how the fund should invest the monies available to it, how to balance the portfolio, and how to handle other aspects of running the fund. This can include things like marketing the fund to potential investors, implementing procedures and policies in the office, and establishing ethical standards for the business.

It is not uncommon for a fund manager to have an advanced degree such as an MBA, along with experience in the industry. He or she may have worked for banks as well as other financial institutions in addition to funds such as hedge funds or mutual funds. This extensive experience often includes activities in different aspects of fund management as a fledgling fund manager learns about accounting, balancing portfolios, responding to market shifts, and financial ethics.

Typically fund managers are supported by a large staff. This can include entire departments to focus on issues like monitoring stock values and maintaining ethical standards, as well as personal assistants who help the manager with administrative tasks. Office hours can be long, as there may be times when a fund manager needs to come in early or stay late to meet over the phone with people in other time zones or to respond to emerging market trends; a fund manager who sleeps through a market crash will be out of a job.

A good fund will have stable management which includes many long term employees. The fund manager is usually compensated in the form of a fee which is based on performance, providing an incentive for the manager to handle the fund well because his or her compensation is tied to returns. Funds with high staff turnover may be experiencing problems which investors could potentially do better to avoid and it is advisable to look up a fund's history before plunging into an investment.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a Practical Adult Insights researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By snickerish — On Jul 26, 2011

@speechie - So glad you asked, because I did not mean personality type! I meant investment type. I am not an expert by any means on the subject, but I know that people can invest in mutual funds (typically thought of as conservative investments), stocks (thought of as riskier), and options trading (also thought of as riskier).

So after taking a class on investing, (doesn't have to be anything taxing, the course I took was just a few hours one day a week for 10 weeks) you will know if you are interested in conservative or riskier options or even if you think that stocks and options are risky investments.

Again not an expert, but hedge funds from what I recall are different than the norm because it is a group of investors and is typically higher risk investing.

Asset managers are managing more than your money. There is such as thing as intellectual property such as copyrights and an asset manager would help you manage your money and your intellectual property.

By Speechie — On Jul 26, 2011

@snickerish - A little of what you wrote about made great sense to me, such as taking a class although you may not be investing your own money will help you choose better when finding your own fund manager.

What didn't make sense to me is when you said "what type of person"? Do you mean you should look for a certain personality type that fits your investment ideas?

And can someone please give me a clue on what is the difference between fund manager, hedge fund manager, and asset management funds?! They sound as though they are all the same thing.

By snickerish — On Jul 25, 2011

@NathanG - I agree as well. If you can find someone who is legitimately researching the markets every day of the week, I too would rather hire a fund manager than try to figure the crazy and detail filled markets.

However, I can only hire a fund manager when I am finally able to save up enough money! As many fund managers have a minimum amount required. So until then I will be my own fund manager per se !

I am already planning ahead for such a day, so I am taking a financial class, to give a lay person some pointers on investing; which may not make me rich but which have helped me feel more confident in investing and, of course, much smarter in my investment choices.

I highly suggest taking a class such as this even if you are planning on hiring a fund manager. These classes can be run by the fund managers themselves, as fund managers teach these classes as another way to market themselves and find new clients.

So the class serves two purposes: 1) You will decide more how you want to invest your money and therefore 2) You will better know what type of fund manager to look for and what type of person you want to manage your money.

By NathanG — On Jul 25, 2011

@Mammmood - I couldn’t agree with you more. In some of the more recent shakeups in the stock market, even the world’s top hedge fund managers have taken a beating.

No one is foolproof in this industry, and there’s a reason that the prospectus of any mutual fund warns you that you could lose money.

However, in the end, I’d rather put my money with someone who is researching the markets every day of the week than try to figure this stuff out on my own. Pick your poison, I guess.

But I do agree that if an investor is skittish about market gyrations and can’t sleep at night, it’s probably time to rebalance a portfolio. You don’t necessarily have to put it in cash. You could put in bonds or even money market funds for awhile.

By Mammmood — On Jul 24, 2011

I’d like to offer a word of caution to those who put their money with fund managers, thinking that nothing can go wrong. Fund manager performance has been somewhat shaky, in my opinion, from everything I’ve read.

The fund manager does spend a lot of time researching companies, and does his best to make the right investment decisions. However, he is also under pressure as well. He has been given money to invest, and he must invest it. What does he do when we’re in a bubble?

Not too long ago, professional analysts were in the hot seat because they never rated a stock a “sell” when they knew they should have. Fund managers are in a similar position.

My point is to do your own research. If you think that it’s time to park your money in cash for awhile until things settle down, do it. The fund manager won’t make that decision for you.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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