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In summary
An investment manager helps manage a portfolio by deciding how money is allocated across investments, monitoring performance, and managing risk. The exact role depends on the service and regulatory framework involved.
- Investment managers may work with individuals, institutions, funds, or other organisations.
- Their work can include asset allocation, research, portfolio construction, monitoring, rebalancing, and risk management.
- A bachelor’s degree in finance, economics, business, or a related field can provide a foundation for this career.
- Professional qualifications such as CFA, CA, or an MBA in Finance can support career development.
- Investment managers and SEBI-registered investment advisers have different roles, although the terms are sometimes used loosely.
For example, if you invest Rs. 5 lakh, an investment manager may decide how to distribute that money across different assets based on your objectives and risk tolerance.
What is an investment manager?
An investment manager is a professional who manages investments according to a defined objective, strategy, or mandate. The manager may research securities, decide how assets are allocated, construct portfolios, monitor investments, and manage associated risks.
The exact responsibilities depend on the type of investment service. For example, a mutual fund manager manages a scheme according to its stated investment objective, while a portfolio manager manages a client's portfolio under a portfolio management service.
What skills and qualifications does an investment manager need?
An investment manager needs financial knowledge, analytical ability, and an understanding of investment risks. Relevant education and professional experience can also support a career in this field.
- Financial knowledge: Understanding financial markets, investment products, and portfolio construction.
- Risk management: Identifying and managing risks associated with investments.
- Analytical skills: Evaluating investment information and making decisions within the applicable mandate.
- Relevant education: A degree in finance, economics, commerce, or a related field may be useful.
- Professional qualifications: Some roles may require relevant professional qualifications and experience.
The exact skills and qualifications required can vary depending on the investment management role, organisation, and applicable requirements.
What are the roles and responsibilities of an investment manager?
An investment manager manages investments according to a defined strategy, investment objective, or mandate. Their responsibilities can include researching investments, allocating assets, managing risks, and monitoring portfolios.
Key roles and responsibilities include:
- Asset allocation: An investment manager decides how to distribute investments across asset classes, such as stocks, bonds, commodities, or other permitted investments, based on the applicable investment objective and risk considerations.
- Research and analysis: The manager studies market information, economic indicators, industry trends, and company fundamentals to assess potential investment opportunities.
- Portfolio construction: The manager selects investments and determines their allocation according to the investment strategy. Diversification can help reduce concentration in particular investments or asset classes.
- Monitoring and rebalancing: The manager reviews portfolio holdings and may make changes when market conditions, investment objectives, or the applicable mandate require adjustments. The portfolio can also be reviewed against the client's risk tolerance.
- Risk management: The manager identifies and manages risks associated with the portfolio. Depending on the investment strategy, this may involve diversification, liquidity management, or permitted hedging techniques.
- Client communication: Where the service involves direct client interaction, the manager may provide portfolio updates, explain investment decisions, and discuss relevant changes. Investors can also review mutual fund performance evaluation to understand how fund performance can be assessed.
These responsibilities can vary based on the type of investment service and the terms of the mandate. The investment manager's role is to manage investments within the applicable strategy and framework.
Also read: What is lumpsum investment
How does investment management work?
Investment management generally involves several stages, from understanding the investment mandate to monitoring the portfolio. The process can vary based on the type of investor, investment product, and management agreement.
Understanding investment objectives: The manager first considers the investment objective, time horizon, risk considerations, and applicable mandate. These factors help determine the type of investments that may be considered.
Researching investments: Investment managers analyse companies, securities, industries, markets, and other relevant information. The research helps them assess potential investments against the portfolio's stated strategy.
Allocating assets: The manager decides how the portfolio may be distributed across asset classes such as equity, debt, or other permitted investments. The allocation depends on the investment strategy and mandate.
Monitoring the portfolio: Investments and market conditions are monitored regularly. The manager may rebalance or adjust the portfolio when changes are consistent with the stated strategy or mandate.
Why is investment management important?
Investment management provides a structured approach to managing a portfolio according to defined objectives. Instead of making individual investment decisions without an overall strategy, the manager follows a stated investment approach and monitors the portfolio over time.
The approach can also help organise decisions around asset allocation, security selection, portfolio monitoring, and risk management. The suitability of a particular investment management service depends on factors such as the investor's objectives, risk tolerance, investment horizon, and the terms of the service.
How do you become an investment manager?
A career in investment management generally involves building knowledge of financial markets and gaining relevant professional experience.
A typical path may include:
- Completing a relevant degree or qualification.
- Developing knowledge of financial markets and investment products.
- Gaining experience in research, portfolio management, analysis, or related areas.
- Pursuing relevant professional qualifications where applicable.
- Building experience in investment analysis and portfolio management.
- Meeting applicable regulatory or organisational requirements for the role.
The exact requirements vary depending on the type of investment management role and the organisation.
Also read: Why invest in mutual funds based on past performance
How can you choose an investment manager?
If you are considering an investment management service, review the manager's role, investment approach, fees, risks, and applicable terms before making a decision.
You can consider:
- Investment mandate: Understand what the manager is authorised or expected to manage.
- Investment strategy: Review how investments are selected and allocated.
- Risk approach: Understand the risks associated with the strategy.
- Costs: Check applicable management fees and other charges.
- Performance information: Review available historical information without assuming it will continue.
- Service terms: Understand reporting, withdrawals, minimum investment requirements, and other applicable conditions.
Want to estimate your mutual fund investment? Use the SIP return calculator and lumpsum calculator to estimate potential investment values.
How is an investment manager different from other investment roles?
Here are the differences between an investement manager and other roles in investment:
Investment manager vs investment adviser
An investment manager manages investments or portfolios according to a defined mandate or strategy. An investment adviser primarily provides investment advice or recommendations to clients.
Investment manager vs mutual fund manager
A mutual fund manager manages a specific mutual fund scheme according to its stated investment objective and strategy. The term investment manager is broader and can refer to professionals or entities managing different types of investment portfolios or mandates.
Investment manager vs portfolio manager
An investment manager is a broader term for a professional or entity involved in managing investments. A portfolio manager manages a client's portfolio under a portfolio management service and follows the applicable mandate and regulatory framework.
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Conclusion
An investment manager helps manage investments according to a defined strategy, objective, and mandate. Their responsibilities can include researching investments, allocating assets, constructing portfolios, monitoring performance, and managing risks.
Understanding the role of an investment manager can help you evaluate different investment management services and compare their objectives, strategies, costs, and risks before making an investment decision.
The Bajaj Broking website provides access to more than 4,000 mutual fund schemes, allowing you to explore different investment options. You can also use mutual fund comparison tools to compare schemes based on relevant factors before investing.
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What does an investment manager do?
Investment managers handle investors' funds to assist in achieving their financial objectives. They develop strategies for allocating stocks and bonds that match the client's goals, execute buy and sell transactions as needed, monitor portfolio performance, and provide clients with regular performance updates.
What qualifications does an investment manager need?
The qualifications depend on the role and organisation. A relevant degree in finance, economics, commerce, or a related field can be useful. Some roles may also require professional qualifications and relevant investment management experience.
Where can an investment manager work?
Investment managers can work with asset management companies, mutual fund organisations, portfolio management firms, investment firms, financial institutions, or other organisations that manage investments.
What is the typical fee structure for services provided by investment managers?
The fee structure depends on the type of investment management service and the applicable agreement. Fees may vary based on the service provided, portfolio size, or other terms. Review the fee structure and applicable charges before using a service.
What methods do investment managers use to keep abreast of market developments and investment prospects?
Investment managers may monitor economic indicators, company information, industry developments, market data, and other relevant research. They use this information to review investment opportunities and assess portfolios against their defined strategies and mandates.
Disclaimer
Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319
BFL does NOT:
(i) provide investment advisory services in any manner or form.
(ii) carry customized/personalized suitability assessment.
(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.
In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.
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Disclaimer on Risk-O-Meter:
Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.
Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.
Disclaimer
Bajaj Finance Limited ("BFL") is an NBFC offering loans, deposits and third-party wealth management products.
The information BFL contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed.
This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.
Disclaimer
Mutual Fund SIP calculator may provide potential investors an approximate estimate on the maturity amount of the monthly SIP, purely based on mathematical calculation of the projected annual return rate selected by investor. However, such calculation does not factor the actual performance by the Asset Management Company (AMC) and should not be treated as any advice or assurance about the actual return of investment. Mutual Funds do not have a fixed rate of return and it is not possible to predict the rate of return. Please note that the SIP calculator are for illustrations only and do not represent actual returns which may vary depending on various factors including but not limited to actual performance, expense ratio, taxation, exit load (if any), etc.