What is Fund Management? Fund management is the discipline of asset allocation, with an emphasis on optimizing the total return through the use of collective investing strategies. Investment management is the specialized task of assessing, managing, allocating funds in terms of a fund’s objectives and strategy. The concepts of management are interrelated and dependent on one another. It is the collective effort of managers to achieve acceptable returns on their invested assets. In simple terms, the manager designs a plan or strategy, which includes the timing and amount of investment, allocation of risk to maximize profits and minimize losses.
The term ‘funds’ generally refers to any unit of wealth that is distributed among multiple investors as part of an investment program. Investment fund managers supervise the buying, selling, and the storage of securities within the funds. Various types of funds are available, including: stocks, bonds, mutual funds, and insurance funds.
Stocks are sold in transactions between investors and companies that issue them. Company issues stocks to raise funds for its operation and expansion. When the amount is raised, there is an offer for shares from the company. Shares are purchased in exchange for cash. A common type of stock is preferred stock. Common stocks have predetermined distribution of dividends.
Mutual funds are large pools of investments that are managed by professional fund managers. They are made up of diverse combinations of securities, each of which is normally managed by a professional financial expert. Small caps and micro cap stocks are some of the most common categories of mutual funds. Fund managers typically use technical analysis and market data to select the appropriate category of security to invest in.
As the name implies, fidelity investments are those managed by individual professionals. Fund fidelity is usually done by experienced traders who have been trading for several years and understand the ups and downs of the markets. Some fund managers also specialize in specific areas such as bond, commodity and equity funds. Their expertise and extensive experience in their chosen areas allow them to earn high rates of return. They are responsible for identifying top quality bonds and stocks to add to their managed portfolio.
Many fund managers work as private entities or for large investment firms. One of the advantages of working privately is that the manager’s assets are not subject to state and federal restrictions on the ownership of securities. One disadvantage is that you may not be able to coordinate the timing of your purchases and sales with your manager. Most managed funds are traded on regular markets and the transactions are recorded in real time, allowing for immediate correction if needed. It is important to work with a qualified professional who can make investment decisions based on your needs, financial objectives, and history of returns.