Fund Manager – Definition, Roles, Functions & How to Become a Fund Manager

Fund Manager Definition:

Before we proceed to define the roles of a fund manager, let’s first understand what a fund is actually. A source of money that will be allocated to a specific purpose is known as fund. Whether it is a city state government setting aside money to construct a new civic center, a college or trust fund setting aside money to give away a scholarship, or an insurance company setting aside money to pay its customers’ claims, funds can be established for several such reasons.

Implementation of strategies involving investment of funds and managing firm’s or company’s portfolio trading activities is performed by one person, two people as co-managers or a team of three or more people. They are known as fund manager(s).

The individuals who manage the fund (mutual, pension, trust funds or hedge funds) of corporate giants or even of individuals high net worth are required to have be skilled, have higher sets of educational qualifications along with elevated professional credentials and appropriate investment managerial experience to qualify for this position (it will be discussed later in the chapter). And based on their work or based on average assets managed, the fund managers are paid accordingly. It is advisable for investors to aim for long-term, reliable and consistent fund performance and must hire a fund manager whose tenure with the fund matches its performance time period.

The basic point of investing in fund is to leave the investment management function to those who are not only professionally trained but who have experience in this field. Therefore, the eminence of the fund manager is analyzing the investment quality of any particular fund.

Currently there are 33 mutual fund companies in India and they deal with over INR 470 billion, so one can assume the job prospectus is brighter in near future.

Funds Management Meaning & Definition:

Managing cash flow of a financial services company or institutions is called as fund management. This institution offers various investment options like: structured products, derivative products, etc. which may not be available to individual investors. Fund manager ensures to take care of both assets and liabilities of the company as well as ensure that client get top returns with their investment products and services offered.

How to Become a Fund Manager:

You might be looking for the answers for questions “How to become a fund manager?” or “What are the fund manager requirement?” Lets look into it.

Educational Qualification – To become a fund manager, you should at-least have an undergraduate degree in commerce, economics or in finance for an entry-level job. However if you want a promising career, post-graduate degree in MBA gives you an upper hand. And various investment management courses like stock exchange can help you fetch a job too. Most common fund manager requirement to reach to top-level is to become expert in finance with some great master degree from best of any colleges.

Age Limit – There is no age restriction to become a fund manager. Fund manager requirement is common for even a 21 years girl or a 55 years men. Concluding that anyone can apply for the position of fund manger for managing the funds for the company.

Once you have the desired degree in finance, you can join an Asset Management Company to gain a firsthand experience. This will help you removing the tag of fresher. After acquiring enough experience you can either startup your own business alone, or can register yourself as AMC with required permissions from relevant authorities.

The Duties and Functions of Fund Managers:

If you’re an individual who owns a million dollar company or say you’re investor. So when you invest in a fund like mutual funds, pensions, hedge funds, etc., you’re actually investing in the fund’s manager, in his skills, aptitude and perseverance. He is the one who is accountable for monitoring, deploying and managing the fund’s investments. Also he must ensure that the fund’s strategy is aligned with its goals. Ultimately, he is responsible for overall operation of the funds.

1. Roles and Responsible for Funds Reporting on Timely Basis:

Fund managers ensures that their funds reporting necessities are accomplished. Funds are subjected to various risks, policies and expenses, thus they are entailed with different strategies. It is the whole sole responsibility of the fund manager to notify the clients and regulators about them and clearly outline them in a prospectus.

2. Fund Managers Ensure to Follow Regulatory Bodies:

Fund managers ensures that their funds operate in accordance with regulations outlined by concerned authorities. Securities and Exchange Commission and other concerned authorities have a predefined set of rules. For example, HedgeCo has clearly mentioned that hedge funds, in no way whatsoever are allowed to use general solicitation or general advertisement to attract new clients.

3. Fund Manager is Accountable for Growth of Client Financially:

If a fund manager is able to deliver growth that exceeds interest rates and the rate of inflation to justify the risks of investing. That’s why he’s paid and moreover people expect growth if they’re putting in their money, time and effort in funds.

4. Fund Manager Protects Investors Money:

Although investing in funds are subjected to market risk, but prudent investors never expect reckless behavior out of a fund manager. So when a fund manager either buy or sell assets it should be backed up by tremendous amount of research and due diligence, and loads of investigation. This is essential to ensure that investors’ money is not in loss.