How Fund Managers Are Changing The Way They Look At Investments | AlphaWeek

Mutual funds are preferable investment options because of their convenience of investment – SIP (Systematic Investment Plan) or lump sum. Mutual fund investments depend on several aspects. One of the important factors is the management of your mutual fund portfolio – stocks, bonds, and other asset classes. A professional fund manager manages mutual funds actively or passively. The fund manager can influence the performance of your mutual fund over time. They adequately apply their investment strategy and minimize risks while aiming to maximize gains.

Here is everything you need to understand about fund managers and whether they can be changed:

Who is a fund manager?

A fund manager is a professional who implements the investing strategy of a mutual fund scheme and monitors and manages the portfolio as per the investment mandate. The fund manager can be a team or an individual, depending upon the investment size of the mutual fund.

Fund managers are remunerated for managing mutual fund investments, which is usually a specific percentage of your mutual fund’s average assets under management (AUM).

What is the role of a fund manager?

Typically, the fund manager of your mutual fund portfolio will:

  • Monitor the growth and performance of the mutual fund portfolio
  • Aim to maximize returns aligned with the risk tolerance and investment mandate of the mutual fund scheme
  • Comply with regulatory authority procedures as specified by SEBI (Securities Exchange Board of India)
  • Minimize the risk of investments during the market’s volatile phases
  • Meet the reporting requirements, such as making the investors aware of the mutual fund investment strategy, the risk involved, expenses, exit load, etc.
  • Furnish all documents and complete all legal formalities of the mutual fund investments

Can a fund manager be changed?

Yes, the fund manager of a mutual fund scheme or portfolio can change with time. However, a fund manager change is not a factor to worry about for mutual fund investors. All mutual funds, especially equity mutual funds, are managed as per the investment mandate, the specific institutional percentage, and market conditions. Hence, a fund manager has no individual impact on the performance of the mutual funds.

When a mutual fund company changes a fund manager, another professional expert takes over and effectively manages the mutual fund portfolio according to the given investment mandate, percentages, and market situation. The management criteria are essentially based on numbers, such as a mutual fund portfolio can have an investment mandate to invest not more than 20-30% in mid-cap stocks and not more than 5% in cash, etc. Irrespective of the fund manager, the investment mandate remains the same, and the mutual fund portfolio is managed accordingly.

Conclusion

Overall, it is important to have a fund manager for the professional expertise they bring to the table. It is not particularly important to stick to a specific individual or team for fund management as all fund managers are experts in their fields. Further, if your fund manager changes, you can use any of the various verified online investment apps, such as the Tata Capital Moneyfy App, to see if your mutual funds’ performance aligns with your goals.