10 Facts About Fund Management firm Everyone Should Know

Fund Management is the process in which a company that takes the financial assets of a person, company or another fund management company (generally this will be high net worth individuals) and use the funds to invest in companies that use those as an operational investment, financial investment or any other investment in order to grow the fund; post which, the returns will be returned to the actual investor and a small amount of the returns are held back as a profit for the fund.

Funds management is the overseeing and handling of a financial institution's cash flow. The fund manager ensures that the maturity schedules of the deposits coincide with the demand for loans. To do this, the manager looks at both the liabilities and the assets that influence the bank's ability to issue credit.

Here’s a look at six common investment strategies among fund managers, including:

·         Top-down investing

·         Bottom-up investing

·         Fundamental analysis

·         Technical analysis

·         Contrarian investing

·         Dividend investing

Funds Management in Action

Funds management—also referred to as asset management—covers any kind of system that maintains the value of an entity. It may be applied to intangible assets (e.g., intellectual property and goodwill), and tangible assets (e.g., equipment and real estate). It is the systematic process of operating, deploying, maintaining, disposing, and upgrading assets in the most cost-efficient and profit-yielding way possible.

Assets, Fund Management Firm: https://myglobalinvests.com/assets-fund-management-firm/

Types of Fund Management

The types of Fund Management can be classified by the Investment type, Client type or the method used for management. The various types of investments managed by fund management professionals include:

·         Mutual Funds

·         Trust Funds

·         Pension Funds

·         Hedge Fund

·         Equity fund management

Offering Investment management services includes extensive knowledge of:

·         Financial Statement Analysis

·         Creation and Maintenance of Portfolio

·         Asset Allocation and Continuous Management

Responsibilities of the Fund Manager?

#1 – Asset Allocation

The class of asset allocations can be debated but the common divisions are Bonds, Stocks, Real estates, and Commodities. The class of assets exhibits various market dynamics and a variety of interaction effects, which makes the allocation of money amongst various asset classes leading to a significant impact on the targeted performance of the fund. This aspect is very critical as the endurance of the fund in tough economic conditions will determine its efficiency and how much return it can garner over a period of time under all circumstances.

Any successful investment relies on the asset allocations and individual holdings for outperforming certain benchmarks such as bond and stock indices.

#2 – Long-term Returns

It is important to study the proofs of the long-term returns against a variety of assets and against the holding period returns (returns accruing on average over various lengths of investment). For example, investments spread across a very long maturity time period (more than 10 years) have observed equities generating higher returns than bonds and bonds generating greater returns than cash. This is due to equities being more risky and volatile than bonds which are in turn riskier than cash.

#3 – Diversification

Going hand in hand with the aspect of asset allocation, the fund manager has to consider the degree of diversification which is applicable to a client in accordance with their risk appetite. Accordingly, a list of planned holding will have to be constructed deciding what percentage of the fund should be invested in a particular stock or bond. Effective diversification requires the management of the correlation between the asset and liability return, internal issues pertaining to the portfolio and cross-correlation between the returns.

You will have to pay the following charges if you invest in a mutual fund;

Management fees: 0.5%to 1%.

12b-1 Fees for distribution: 0.25% to 1%. These are the advertising charges for attracting fresh customers.

Administrative fees: from 0.2% to 0.4%

Loads of sales (fund’s load): 3% to 5.75%. You'll have to pay for purchasing stocks from the mutual fund.

Exchange fees: This is the extra fee to be paid when switching to another fund or selling units of the mutual fund (exit load).

Duties of a Fund Manager

a. Meeting the reporting requirements

b. Complying with Regulatory Authorities

c. The Protection of Wealth

d. Monitor the growth and performance of the fund

e. Oversight and Hiring

FaQ

·         What does a fund management company do?

·         Is fund management the same as asset management?

·         What are the principles of fund management?

·         What is a fund manager salary?

·         What does a fund management company do?

·         How does fund management work?

·         Is fund management the same as asset management?

·         What is a fund in asset management?