What Is a Fund Manager? (Plus Duties, Skills and Training)
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Fund managers have a significant influence on the growth of an individual's or corporation's funds. They directly manage their clients' financial investments, such as bonds, stocks and other securities, and ensure these assets are invested in the right places. When pursuing a career in fund management or simply researching this field, it's important to understand the concept of fund management and what the role entails. In this article, we discuss what is a fund manager, review their responsibilities and skills and detail how to become a fund manager.
What is a fund manager?
A fund manager is a financial investment expert who manages their clients' investments and funds to bring maximum returns. Using skills, knowledge and experience, they come up with investment strategies that help to grow their clients' wealth. Fund managers also buy and sell investment shares, trusts and bonds on behalf of their clients, according to each client's financial goals and risk tolerance.
Responsibilities of a fund manager
Fund managers perform different functions for their clients. Below are some of their major responsibilities:
Meet reporting guidelines
Many fund managers manage clients' funds in accordance with the reporting standards established by financial institutional policies and regulations. They not only control funds with consideration to the objectives of the investors, available expenses, strategies and risks, but also take note of all necessary regulatory policies and ensure that their clients are aware of them and abide by them. Fund managers submit all necessary documents on time and in accordance with rules and regulations.
Direct clients' investment activities
One of the primary duties of a fund manager is to direct their clients' investment activities within a specific fund, including bonds, stocks and securities. Based on a fund's stated mandate or investment strategy, fund managers allocate assets to be added to the fund. They also conduct research and analyse the market to identify high-performing securities that can provide the highest possible return on investment for their clients. Many also perform due diligence and decide which securities can best mitigate their clients' risks.
Provide investment advice
Fund managers do more than just direct their clients' investments. They also offer financial management and investment advice to their clients and other financial experts. With the aim of achieving their clients' financial goals, professionals in this role develop personalised financial plans about investments, savings, tax strategies, insurance and budgets. They also evaluate an investment's objectives and performance and recommend different strategies such as fund rebalancing. Where investors are uncertain about certain funds, fund managers also advise and educate them on the long-term strategies to adopt to achieve their financial goals.
Complete financial transactions
Using the funds they manage, fund managers complete financial transactions such as buying and selling bonds, stocks and other securities on their client's behalf. They use some measures of risk such as value at risk (VaR), standard deviation, beta and conditional value at risk (CVaR) to conduct complex transactions with the aim of reducing liability and driving profit for investors. They also weigh the benefits of different transactions to see if they can support a client's overall financial goals.
Protect clients' wealth
Fund managers have a responsibility to protect their clients' wealth. They secure an investor's wealth by ensuring that there is sufficient diversification in an investment portfolio. They also use their skills and expertise to conduct extensive research and investigations into companies and securities of interest for the client. Fund managers also adopt risk management techniques when investigating investments to avoid unnecessary risk assumptions.
Maximise cash flow
Cash flow is the money that flows in and out of an investor's funds through profits and expenditures like taxes, salaries and loan payments. Fund managers maximise cash flow through adequate internal procedures, timely billing, collecting and depositing revenues. They also do this by managing inventories, evaluating payment terms and increasing profitable sales. These activities help to ensure that the investor's cash flow remains positive and sufficient to fund their operations.
Monitor fund growth and performance
Investors judge fund managers based on how they manage funds and ensure growth that supersedes inflation rates and interest rates. For this reason, fund managers work hard to monitor the performance and growth of their clients' funds. They do this by conducting weekly or bi-weekly meetings to evaluate a fund's performance and identity any financial crisis. Based on the result of their assessment, they take remedial actions and develop strategies aimed at improving fund performance and driving profitability.
Manage budget and maintain records
It's the responsibility of fund managers to develop financial plans and ensure there are sufficient funds available to conduct transactions throughout the fiscal year. Fund managers also document and maintain records relating to their transactions and investments and subject to their agreement with the client, they write and deliver weekly, monthly or quarterly reports about their financial activities and the fund's performance. This helps investors to monitor the manager's efficiency and provide feedback about their performance.
How to become a fund manager
Financial experts like fund managers are in high demand. Below are four steps you can take to become a fund manager:
1. Get a bachelor's degree
Most entry-level fund management jobs require candidates to have a bachelor's degree in accounting, finance, computer science, information technology or other related fields. To become a fund manager, you can develop knowledge of core financial subjects like accounting, statistics, mathematics, economics and business law. To improve your chances, you can obtain your degree from a high-ranking university. Doing so can boost your CV, impress your potential employers and increase your earning capacity.
2. Obtain a Fund Manager Licence
Fund managers conduct regulated activities and offer fund and asset management services to investors and clients. To become a fund manager, in addition to obtaining a bachelor's degree, you can apply for a fund manager licence. To obtain this, submit the relevant application forms to the Securities and Futures Commission (SFC) and adhere to other stipulated requirements for regulated activities.
3. Get additional certifications and skills
Recruitment requirements may differ from employer to employer, but most companies require employees to have relevant skills and certifications. Some of the most relevant certifications for fund managers include the Hong Kong Institute of Certified Public Accountants (HKICPA), Association for Chartered Certified Accountants (ACCA) and Certified Public Accountants (CPA). These certifications may increase your credibility as you apply for jobs and are generally beneficial to your fund management career.
4. Gain relevant work experience
Candidates with at least three years of fund management work experience stand a better chance of getting a job. To become a fund manager, another step is to find jobs that can provide you with practical fund operation knowledge and fund accounting experience, either in private or hedge funds. Some of the entry-level jobs you can explore include investment analysis, account management or data analysis. Experience in these fields can help you improve your financial management and leadership skills, which can help you in your job search for fund management roles.
Skills needed to become a fund manager
Excelling as a fund manager requires many soft and hard skills. Below are some of the soft skills you need to succeed as a fund manager:
Analytical ability: Prediction of a stock's performance requires both quantitative and qualitative analysis. Fund managers can develop analytical thinking skills to study the financial market and decide which investment can yield the most returns for their clients.
Organisational and administrative skills: A major part of a fund manager's responsibility requires them to manage client's portfolios, monitor stocks and track fund sources. To execute these activities efficiently, fund managers can use strong administrative and organisational skills.
Quantitative expertise: Fund managers often assess risks, make recommendations to investors and predict future prices and trends. A strong numerical and quantitative knowledge helps you to calculate dependencies and analyse quantitative models.
Financial knowledge: To successfully help their clients achieve their financial goals, fund managers can develop a good understanding of the dynamics in the finance market. This includes a good knowledge of financial instruments and products such as commodities, futures, exotics and interest rates.
Communication skills: Fund managers make recommendations about assets under their management to their clients. They can use both written and verbal communication skills to explain complex financial information to investors or employees who may not understand some financial terminologies.
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