Mutual fund manager – Why are they important?

Werner Heisenberg, the famous German theoretical physicist, once said, an expert is someone who knows some of the worst mistakes that can be made in his subject and how to avoid them. Investing your hard-earned money can be challenging but leveraging the knowledge of an expert can help. A mutual fund manager is an expert who manages the mutual fund scheme, makes critical decisions on buying and selling, and helms the fund's objective in the right direction.

Find out more about the roles and duties of these professionals and how they add value to your investment journey.

Role and duties of a mutual fund manager

What a class monitor is to a class, a mutual fund manager is to an Asset Management Company (AMC). Naturally, they have certain responsibilities. Stating that fund managers manage the mutual fund scheme is very generic. So here are some of their roles and duties that will help you understand exactly what they do:

• Conducting research and analysis:

Fund managers look for the right securities, sectors, themes, etc. for investment. They keep a tab on any shifts in the stock market, corporate announcements, macroeconomic factors, and so on. They analyse the performance of funds, review the annual results of AMCs, and more with the ultimate aim of earning profits.

• Complying with reporting requirements:

Fund managers ensure that the fund meets the reporting requirements of governing bodies. Mutual funds are regulated by the Securities and Exchange Board of India (SEBI). Fund managers make sure that the investment objective of the scheme, its strategy, costs, policy, etc., comply with the regulations of SEBI at all times. This involves maintaining documents, ensuring investor compliance, timely submission of relevant documents, and more. 

• Protecting investors' wealth:

All mutual funds are subject to investment risk. Some schemes, such as equity funds, may even carry more risk than others, such as debt funds. Fund managers mitigate this risk with proper analyses and risk management techniques. They buy and sell securities, maintain a diversified portfolio, and conduct extensive research to minimise risk and maximise returns.

How to evaluate a fund manager? 

Before you invest in the mutual fund of your choice, check the following:

• Past experience: Look at the manager's experience in the past. Check their qualifications and the kind of schemes they have worked on before. This will give you an idea of their competence.
• Other schemes: Check other mutual funds that the fund manager may be managing. Look at their performance to understand the fund manager's proficiency.
• Reviews: You can read online reviews for more clarity. You can also check the annual reviews of the company the fund manager works with.
• Investment style: Each fund manager has a unique style of working. As an investor, your perspective should match with the fund manager.

Conclusion

While there are several other factors that can determine your returns, such as the type of mutual fund, the expense ratios, investment terms, etc., the fund manager remains one of the most critical aspects. Therefore, make sure to get to know your mutual fund manager and then make an investment decision. 

An investor education initiative by Edelweiss Mutual Fund

All Mutual Fund Investors have to go through a one-time KYC process. Investors should deal only with Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit - https://www.edelweissmf.com/kyc-norms 

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