Fund Manager

A fund manager refers to an investment professional responsible for fund investment strategy formulation and implementation. They collect and invest the money from various investors and create a good variety of managed funds catering to the diverse preferences exhibited by the investors. 

The investment professional is entitled to manage the funds' portfolio and associated trading activities. Their goal is to maximize gains while minimizing risk. In addition, they often gain a competitive advantage through product innovation by working on the characteristics of the funds offered, investing in brand promotion, advertising, and offering attractive fee structures and discounts.

• Fund managers design and implement the funds’ investment strategy.
• They monitor funds’ portfolios, engage in research, and analysis to understand market sentiments, pick the suitable investments for their clients, and adjust them as needed for maximum profitability.
• Conventionally, fund companies follow the “two and twenty” fee, model. That is 2% of the value of AUM and 20% of the profit passing the threshold.
• The qualification for the fund management professional varies by country. Generally, they should have experience, education, licenses, and certifications in the relevant field. 

Fund managers' skills and performance play a significant role in fund performance. Their investment styles, timing skills, and better stock-picking ability result in higher returns and better performance. When investors lack the expertise and time to study the market, they choose fund management companies. Investor trust management professional's abilities and enters into contracts for fund management. However, the investor also can place constraints on the manager's actions.

A fund management professional has several responsibilities. Client communication is one of the essential elements helping the investing professionals streamline investing activities with the investors' preferences and convey the portfolio performance. 

Identifying investments that have a high potential for gains with minimal risk and engaging in picking several of such assets to populate a fund's investment portfolio is vital. So, it is necessary to conduct extensive research and analysis to get information about market sentiments, economy, global events, and what is happening with the companies whose stocks are part of the fund's portfolio. Then, the study results are used to optimize current and future investment decisions.

In the United States, the fund manager salary (average base pay) based on data updated on December 2021 is $72,490. There are many famous managers whose earning is in billions in a year. In 2020, Israel Englander of Millennium Management's earned $3.8 billion and topped the list of highest-earning managers 2020. In the same year, amid covid 19 pandemic and market volatility, the top 25 hedge fund managers' earnings accounted for a record amount of $32 billion, and the top 10 managers globally earned $20.1 billion.

The fund manager's fee is often linked to the value of the asset under management (AUM); that is, it will be a percentage of AUM or fund value. Therefore, the total amount a fund management professional gets depends on the size of the fund they manage. Usually, actively-managed funds come with higher fees compared to passively managed. Nevertheless, it is not assured that actively-managed funds do outperform passively-managed funds.

Nowadays, managers charging a fee of less than 1% or more than 2% of AUM is not uncommon. Traditionally, managers apply the "two and twenty" fee method for charging their customers. The two refer to the standard 2% of the value of the assets under the management and is paid to the manager annually. The 20% fee is paid when the investments yield a profit that exceeds a certain threshold. The 20% of profit is considered the bread and butter for managers since it makes many millionaires and even billionaires. The key is to carefully invest the money for maximum returns so that the manager can gain a profit that exceeds the minimum required level to get the 20% bonus.

It can be lucrative to become renowned fund management professional. To be successful, in-depth knowledge of financial assets and the market is essential. Most firms prefer candidates with significant qualifications like CFA certification, financial analyst certifications, CFP certification, MBA or masters in accounting, finance, statistics, mathematics, or certified in advanced investment analysis and portfolio management. The courses should ideally be in investment-related fields. Even undergraduates can enter the financial analysis field as junior analysts and start their journey to become fund management professionals. 

The qualification requirements may vary by country. For example, to become a fund manager in Australia professional must hold an Australian Financial Services License. On the other hand, the US license requirement may vary with the factors like the type of investment involved, the fund manager's company policies, legislation of the state where the fund is registered. For instance, some companies require professionals to undergo a course before handling customers' assets.

Regulatory bodies like FINRA give different certificates and licenses depending on what type of fund management professional one would want to become. Furthermore, some state mandates a series 65 license, and some require official registration as an investment advisor. Generally, in the United States, persons who manage the portfolios of registered investment companies must register with the SEC as investment advisers under the Investment Advisers Act of 1940. 

This has been a guide to Fund Manager and its Meaning. Here we discuss how to become a fund manager with its salary, fees, and job. You can learn more from the following articles -

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• Investment Manager
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