Fund Manager - Explained
What is a Fund Manager?
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Table of ContentsWhat is a Fund Manager?What Does a Fund Manager Do?Fund Management: Threading the RouteFund Manager: Daily ActivitiesFamous Mutual Fund ManagersFamous Hedge Fund Managers
What is a Fund Manager?
A fund manager is an individual who takes up the responsibility of implementing a funds investing strategy and controlling the trading activities contained in the portfolio. Funds and portfolios can managed by a single individual, two persons, or possibly three or more persons. The number of managers simply doesn't matter to the investor, as he gets to pay the same fee he'd pay for a one person management even if there are three persons managing the portfolio. Fund managers are generally paid for their services usually in the form of a percentage of the assets under management (AUM) and sometimes from the returns acquired depending on the contract.
What Does a Fund Manager Do?
For an individual to be considered for the position of a fund manager (mostly in mutual funds, hedge funds, trust funds, and probably in pension funds), he or she must have an advanced knowledge of investing properly, with previous investment managerial experience preferred. Also, a high level of formal education is required, but can be overlooked if the applicant has an awesome track record. Investors are also required to search for fund managers with long term experience, preferably a consistent experience and probably a manager whose tenure matches the funds performance time period. One of the benefits of investing in a fund (mutual fund, hedge fund, and the likes) is handing over investment decisions to those with professional experience. Also, the quality of the fund manager is something that one must consider before taking on any investment in a given fund.
Fund Management: Threading the Route
Becoming a fund manager can be quite beneficial (if not totally beneficial). This is because it raises the prestigious level of the manager and also generates unlimited income for them. For one to be a certified and respected fund manager, a certification as a Chartered Financial Analysts (CFA) is required as it is one of the fastest ways to get to the position of a general stock picker for a given portfolio. CFA candidates usually undergo difficult trainings and coursework related to investment analysis and proper management of portfolios. Usually, these analysts help managers with research on potential investment ideas and provide different recommendations on buy and hold plus hold and sell strategies or investment stocks. After gaining experience working in the fund, becoming familiar with their mode of operation and management style aids the securities analyst in building a successful career path. Chartered Financial Analysts who have garnered wild successes build up quality cases for potential promotion to managers if the opportunity to do so arises.
Fund Manager: Daily Activities
Being a fund manager isn't a get-rich-quick scheme as you have to work hard to make sure that your clients benefit from investing with you. While managers earn a substantial sum (which is mostly jaw-dropping in most cases), their daily activities seem to be worth the pay. As a fund manager, you have to research stocks, bonds and other securities that can bring in profit for any designated portfolio, and determine which one to invest in based on your clients risk level. In a case where the fund is bigger, the manager can have a team of individuals that are working under him, like in the case of analysts and traders who are required to take care of some of the activities needed to grow the portfolio size. In some cases and depending on the company, multiple managers can take up different portions of a clients portfolio and manage them according to the best of their knowledge. To avoid confusion, there will obviously set up a panel to discuss what each manager wants to do, and analyze if it is best for the fund, or if the manager would forfeit his or her idea. Fund managers also carry put the task of reporting to clients on how well their portfolio is performing, develop reports for potential clients to have an idea about the risks involved in investing with the fund, and also picking out clients that are actually good for the company among the numerous offers which they'll receive.
Famous Mutual Fund Managers
Peter Lynch remains one of the best mutual fund managers which the American investment sector has come to know. Famously recognized for lifting Fidelity Investments via Magellan Fund, Peter Lynch smacked his name down in the hall of fame of great mutual fund managers. Lynch managed Magellan funds from 1977 to 1990, and he was able to get the firm to the top by making use of his uniquely designed strategy: investing only in stocks that he was comfortable with. He was able to achieve an average of 29% annual returns throughout his stay as head manager of Magellan funds. He actually grew a $20 million asset-under-management to $14 billion in just 13 years. Albert Ab Nicholas who is the founder of Nicholas Company also had a massive track record. He was a unique portfolio manager who was capable of beating the S&P each year from 2008 to 2014.
Famous Hedge Fund Managers
In hedge funds, the minimum amount needed to start investing is quite high and these funds tend to be more selective about accepted clients. This is what differentiates a hedge fund from a mutual fund. Ken Griffin was one of the most notable hedge fund manager after having successfully managed Citadel Global Equities. He initially started buying stocks from his college days as a Harvard student, and was able to start up his company in 1990 using $4 million. As of 2018, Griffins net worth was estimated to be at around $9.1 billion after translating more than 13% returns on investment after fees in 2017.