While investing with mutual funds, the fund manager is the term that becomes significant for us to know. A fund Manager is not a simple term but a person assigned to make the financial decisions on behalf of the investor by the mutual fund house. He takes all due care and precautions to uphold the profit over the investment for the customers.
Who is the Fund Manager?
The fund Manager is the person appointed by the trust (AMC), whom we discussed in the earlier blog on Mutual Funds. He is there to take care of the money of investors. He is the person who is responsible for giving returns on our investments over a period of time. But how he is doing this for us?… Because AMC pays fees to him for the job in which he is qualified and experienced.
The Fund Manager takes decisions on behalf of the AMC or investors about the purchasing and selling out of stocks of various companies depending on his own research and analysis about the future of the particular stock. The role of the Fund Manager is critical for any Fund House because ultimately he is the one who will be witnessing and tracking the market in a true sense for investors and trade accordingly on their behalf.
The Role of a Fund Manager
Every Mutual Fund House or AMC has one person appointed as their fund manager who looks after all the trading decisions of the AMC. If we are investing in a Mutual fund house that means :
⇒ We don’t have any experience with how the market operates and how should we start investing in it.
⇒ Also, we don’t want to get exposed to unnecessary risk of market volatility, so the fund house hires a well-experienced and qualified person who can predict the future of the market with his vast knowledge of the market. He has his own methods of calculations, and he researches the stock market behavior and accordingly takes the decision in lieu of his fees.
The fund manager is responsible for Complying with the requirements of regulators and tracking the performance and growth of funds, and also it is his primary duty to give cover to the investment made by the customer from market volatility and generate returns. He is trading your money with great care and exceptional skills on your behalf in the stock market.
Why You must know your Fund Manager
Before investing in any Mutual Fund House, here are some points which we must know about the fund manager of the mutual fund. Because ultimately he will be responsible for all the financial decisions taken on behalf of all the investors with their investments.
⇛ Look for the tenure of the Fund Manager in the current mutual fund house in which you are going to invest. If the same person is performing the duties of Fund Manager for the past while the fund was performing well, then you can invest with that mutual fund house provided all other conditions for investments are met.
⇛ If the Fund House has appointed a new Fund Manager in which you are planning to invest then have the patience for 8 to 12 months. Track the performance of the fund for these months and if the fund performs well during this period, then you can opt for it otherwise go for another fund house.
⇛ If Fund Manager is changed or he left the AMC after you did your investment then please don’t take any hasty decision. In that case, also, wait for another 8 to 12 months and track the performance of the fund. If in this period also, the fund performs well, then you can continue with the same mutual fund otherwise go for another fund house.
Fees of Fund Manager
The fund Manager is an employee of the fund house and he operates in lieu of the fees. Fund Manager’s fees and other taxes are discussed in another blog over 6 types of Mutual Fund Costs and those taxes are also borne by customers like you and me which impacts our investment. So while planning to invest in a fund its associated mutual fund cost must be known and taken into consideration.
SEBI (Security Exchange Board of India) is the regulator of the commodity and security market in India and all Mutual funds must be registered with SEBI. SEBI can be visited through its Official website It keeps an eye on the performance and default and accordingly provides guidance to the houses for the sake of consumers.
It Defines large-cap as one that features within the first 100 companies by market capitalization on the stock market, Midcap from No. 101 to 250, and Small Cap 251 and below. But in general, one other definition is being followed for Companies to be categorized as Large-cap which has a Market Capitalization of more than 10,000 Crore, Mid Cap companies have a Market Capitalization of 2500 to 10,000 Crore. While Small-Cap companies have a Market Capitalization below 2500 Crore.
So it can act as a guideline for you to select your fund for investment and a better prospectus in the future.
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