What is a fund and what does a fund manager do?

An investment fund is a pool of money belonging to a number of different investors which is used to collectively purchase securities (e.g. stocks, bonds or other assets). This method of investing helps to manage the risk profile of each individual’s investment portfolio and allows them to have access to a broader selection of investment opportunities than they would have if approaching the markets independently. Examples include hedge funds (which invest the assets of institutions and high-net-worth individuals to diversify risk and generate returns) and mutual funds (which invest the money of a number of investors in a diversified portfolio of assets). Funds may focus on specific types of investment (for example renewable energy) and this allows investors to select funds that best represent their own investment goals and interests. The aim of every fund is to make a profitable return on investment

Fund managers are financial investment experts who use their knowledge, skills and experience to invest money on behalf of their clients. With the guidance of the fund manager, an individual investor will choose a fund based on their investment objectives, risk appetite and fees involved. While each investor retains ownership and control of their assets, it is the role of a fund manager to make decisions about how a fund’s resources should be invested.

The fund manager is obligated to make investments that are compliant with the scheme rules and is paid to optimise returns in line with the level of risk of a particular fund. They are continually evaluated by financial planners and investors with regards to how well their funds perform and, while a market forces impact the performance of a fund, the manager's skills are a key factor. Successful Fund Managers can lead their fund to outperform market indexes, generate significant returns and are in high demand.

Key responsibilities

  • Analysing market data and understanding client investment goals to develop funds that balance income and risk management
  • Directing client investment activities for stocks, bonds, and securities within a particular fund
  • Actively managing funds, deciding which securities to incorporate into the fund’s mix of products
  • Monitoring performance of managed funds - identify shortcomings, developing strategies to offset losses and drive profitability, taking corrective actions to improve fund performance
  • Producing weekly, quarterly or annual reports on fund performance
  • Researching companies, gathering financial information and reading financial briefs prepared by analysts
  • Maintaining records and documentation related to investments and transactions
  • Ensuring compliance with industry regulations and best practices
  • Keeping up-to-date with the UK economy, current financial news and financial markets

Why are they important?

A fund manager is responsible for the investment strategy and management of all funds under their supervision. They are entirely accountable for the performance of the fund, the return on investment and the profits available to investors.

Skills needed for this role

Fund managers must conduct research on companies, monitor market and economic trends, as well as track securities in order to make informed investment decisions. They should also have strong analytical and problem-solving skills, along with the ability to work effectively under pressure. Excellent interpersonal and communication skills are also vital for successful fund managers.

Strategic Professional Options examinations linked to this role

Advanced Financial Management

Career opportunities presented by this role

Fund management is a competitive field but one that can attract high levels of remuneration for investment professionals with successful track records. Professionals in this field are typically employed by investment banks, investment houses, insurance and life assurance companies and stockbrokers.

Competencies

High level competencies required include:

  • Advisory and consultancy

    A. Gathers and understands financial and non-financial information to develop complete knowledge of the client business and the environment in which it operates.

    B. Provides expert advice that will add value to the business and gain advantage.

    C. Identify and advise on business partnering to develop strategic relationships to create opportunities, improve performance and solve business problems.

    D. Prepare and present business plans and advise on the actions to implement these plans.

  • Data, digital and technology

    A. Identifies strategic options to add value, using data and technology.

    B. Analyses and evaluates data using appropriate technologies and tools.

    C. Applies technologies to visualise data clearly and effectively.

    D. Applies scepticism and ethical judgement to the use of data and data technology.

  • Financial management

    A. Links developments in global trade, markets, business practices and the economic environment to required improvements in the financial and risk management of an organisation.

    B. Advises on business asset valuations, capital projects and investments using appropriate analytical qualitative and quantitative techniques.

    C. Identifies, evaluates and advises on alternative sources of business finance and different ways of raising finance.

    D. Communicates and advises on the impact on financial decision making on current developments in regulation, governance and ethics.

    E. Assesses and advises on appropriate strategies to manage business and organisational performance regarding business and finance risk and effectively communicates the impact.

  • Governance, risk and control

    A. Evaluates organisational structures and governance to protect the long-term interests of stakeholders.

    B. Recommends appropriate strategies to ensure adherence to governance structures and application of best practice internal controls.

    C. Identifies and manages risk appropriately.

    D. Uses risk management for the best interests of an organisation and its stakeholders.

    E. Monitors and applies relevant legislation, policies and procedures.

  • Stakeholder relationship management

    A. Positively develops relationships with internal and external stakeholders.

    B. Communicates and gains commitment from internal and external stakeholder.

    C. Uses emerging technologies to collaborate and communicate effectively with stakeholders.

    D. Applies professional and ethical judgement when engaging with stakeholders.

    E. Aligns organisational strategic objectives with stakeholder needs and manages expectations.