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Finance

What is an Investment Fund Manager?

By Adam Hill
Updated May 16, 2024
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For the investor who wants to make money in the financial market, but doesn’t have the time or desire to continuously manage a portfolio, there are a variety of asset management services available. One of the professions in the field of such services is that of investment fund manager. An investment fund manager assists clients in investing their money in stocks, bonds, and other assets. Investment management is a very large global industry, responsible for the care and investment of many trillions of U.S. Dollars (USD), as well as investments in many other currencies.

An investment fund manager can be an individual or a firm, whose work tends to fall into two distinct categories. The first category consists of those who offer direct financial advice to individuals and businesses. These investment advisers are often employed through banks and other financial institutions to perform services such as financial planning for clients of the institution. The second type of investment fund manager consists of those who offer asset management services for clients such as corporations, hedge funds, insurance companies and pension funds. Investment fund managers who work for these types of clients are typically responsible for very large sums of money.

In the U.S., there is a complex process of registration involved in becoming an investment fund manager, sometimes involving registration with state and federal government authorities, examination requirements, and other important steps. Whether or not an investment fund manager must register with the Securities and Exchange Commission (SEC), for example, will depend on the amount of assets under management (AUM) at the firm. In order for a firm to be able to register with the SEC, the firm must have at least $25 million USD of AUM, and if it has at least $30 million USD of AUM, it is required to register. If the firm has less than $25 million of AUM and doesn’t anticipate that that will change in the next 120 days, then it is required to register with the state, rather than the federal government.

In light of the large sums of money which fund managers control, they owe their clients, under U.S. law, an ongoing fiduciary duty. This means that an investment fund manager will be open and honest with his client, providing full disclosure of all fees and possible conflicts of interest. The fund manager, in complying with his duty, is committed to select investments with only his clients’ best interests in mind.

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Discussion Comments

By PinkLady4 — On Jul 26, 2011

I think in order to receive good investment fund management, customers need to be proactive so that they can show the management team that they want to have a part in their investment management.

For example, they need to make frequent calls to the managers to get information about how the fund is doing and if any changes are necessary.

Customers need to make sure they read reports that are sent out by the investment company.These tell about the market conditions and much more.

Many investment companies think that long-term investments produce the best rewards. So you have to be willing to wait for your return.

If you are short on time, or you have large sums of money to invest, it's probably a good idea to use money management and pay the fee.

By BoniJ — On Jul 26, 2011

When I put some of my money into an IRA Mutual Fund, I knew very little about investing. I also didn't have enough time to figure it out. So I put the fund under the control of an investment fund manager. He called and asked me how I wanted my money distributed - conservative, moderate or more risky. Then he with a group of managers, would choose mutual funds that fit into the categories. I paid him a quarterly fee.

But after a couple of years, I became more interested in investment and began learning about it. I read books, online articles,and talked to other people. Finally, I decided I was ready to take the plunge. I let the manager go and took over the responsibilities of managing my fund on my own. So far - so good!

By Mammmood — On Jul 25, 2011

@Charred - I’ve been a fund investor for the past ten years. I wasn’t always invested in mutual funds however.

I started out investing in the stock market, at the height of the Internet bubble, and I broke every rule in the book for investing. I think a lot of us did. It was so easy to put all of your eggs in one basket called Internet start-ups because for awhile, it seemed like those companies had no place to go but up.

Of course we all know what happened. I took a big licking from that debacle and thereafter just started putting my money in a basket of mutual funds, letting the fund managers make the really big decisions for me.

No, I won’t get as rich as riding a high powered stock all the way to the top, but I won’t lose my shirt either.

By nony — On Jul 25, 2011

@Charred - Building up for your retirement is a good idea, for certain, but let me give you another piece of advice – consider investing in a fund that helps out in humanitarian efforts around the globe.

One such example of this is the children’s investment fund management. It’s a hedge fund that’s based in London, and it gets its name from the fact that the fund helps poor children in developing countries.

It’s a combination of a fund and philanthropic organization all in one. I don’t know exactly how the two work together, just that they do. You can make money (and lose money) with this fund just like you can with any other fund, but it feels good to know that you’re helping to make the world a better place for those that are less fortunate.

I’ve been invested with them for the past six

months. The rest of my funds are just regular stock investment funds.

By Charred — On Jul 24, 2011

@SkyWhisperer - I recently opened up a 401K account with my company. However, I did nothing with the account for a whole year.

I didn’t pick any mutual funds to invest in. As a result, all of that money going into my account just went to “cash.” Well, you’re not going to retire on cash alone, that’s for sure.

So finally I spent some time during a weekend to pore through the prospectuses for the list of mutual funds that were listed in my account. It was really worthwhile.

In the end, I chose a mix of aggressive growth, conservative growth, bond and foreign investments. Each of these mutual funds had ratings and as a newcomer myself, that helped me to determine whether it was worth putting the money into them.

I’ve allocated my money to ten mutual funds, and the diversification has done me well so far.

By SkyWhisperer — On Jul 24, 2011

Years ago, as a newbie investor, I opened up an account with an investment fund management company.

This was before online investing became the norm. I admit I knew very little about stocks and even less about what kind of questions I should be asking the manager when I called.

I mostly asked really simple questions like, “What is the stock symbol for company XYZ?” I mean I was really new to stock investment. The manager did help me of course with those as well as more complicated questions, like finding out why a stock I just purchased began taking a nose dive.

Of course now with the Internet I can find out that information very easily but back then I really didn’t know where to get it besides the newspaper. I quit using the stock manager when online trading became all the rage and I could do things on my own.

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