The essential role of fund managers in enhancing mutual fund performance

Investing in mutual funds, at times, can be quite tedious. As an investor, you need to consider several important parameters to generate maximum returns from your investments in mutual funds.
One of these parameters is to manage the bonds, stocks, and other assets in your portfolio. This is where fund managers come in with important roles and responsibilities.

Fund managers do an extensive research on the portfolio and the market conditions, and make buying or selling decisions that ensure maximum returns are maintained. Therefore, your fund manager plays a crucial role in ensuring that your investments bring you a good amount of returns.

Fund managers are usually one or two individuals, or at times a group of three, who oversee your portfolio and make the necessary investment decisions.
 

The responsibilities of fund managers include management of your portfolio after they have gathered information regarding several companies, and on economies across the globe, to predict the future prices, analyse the same, and make decisions of whether or not to sell a specific bond or stock.
 

Fund managers, additionally, are always going to maintain close contact with you so that they can develop an investment strategy based on your risk appetite and investment goals. A portfolio being managed by a fund manager could either be active or passive.
 

When a portfolio’s components are decided upon on the basis of an underlying index, the portfolio is considered to be passive. Every passive portfolio is based on an established index. When it comes to active portfolios, it is the fund manager who chooses what the components will be. Your fund manager is an important person who ensures the better performance of an active mutual fund

• Fund managers are responsible for ensuring better growth and higher returns of mutual funds.
• Fund managers have to predict the future prices and analyse the same.
• Fund managers have a hired team of professionals who further aid them in fulfilling their responsibilities to a fund.

Select the stocks and manage asset allocations

A fund manager is responsible for deciding on which bonds, stocks, and other assets to buy through the money you are putting in as an investor.
 

Fund managers are usually assisted by a team of research staff, financial analysts and readers, who are hired to present accurate data that would assist the fund manager in taking the right decisions.
 

Additionally, deciding the proportions of the assets across several categories and the amount of cash that is to be held is among the fund managers’ responsibilities.
 

Meet reporting standards
 

Fund managers are in charge of developing portfolios that meet the reporting requirements.
 

It analyses the investor's risk profile, strategy, and objectives, along with other pertinent factors to build a portfolio that fits them best.
 

To do this, the fund manager should also ensure that the investors are aware of the rules so that the investors do not keep breaking the rules, which could be providing all the necessary documents without fail and in accordance with the law.
 

Avoid taking careless risks
 

Although mutual funds schemes expose you as an investor to a certain level of risk that would help generate returns, a fund manager should work to ensure that the degree of risk will not decrease your wealth.
 

Adequate and abundant techniques like risk management and investigating companies should be used to protect you from losses. Along with this, diversification should be kept in control so that the risk would be reduced.
 

Ensure growth and returns
 

The fund manager is also responsible for the generation of returns higher than the interest and inflation rates. Fund managers are judged based on their capability to do so.
 

A better performance of the fund, therefore, is the fund manager’s credit. This also justifies the risks that a fund manager decides to take for generating better returns and ensuring that the fund’s performance is above-average.

Outsource
 

Managing a fund is very cumbersome, so fund managers may hire a professional or firms for some of their work, such as raising money, issuing annual reports, and other regulation-related responsibilities. This lightens the burden of work. However, the fund manager must realise their sole responsibility to the fund.

As an investor, you should be aware that highly skilled fund managers deliver premium returns, and also help in increasing investor confidence in a company. Furthermore, a fund manager’s expertise and knowledge are important factors that help manage complicated funds in an ever-evolving market.
 

The Bajaj Finserv Mutual Fund Platform has over 1,000 mutual funds that you may take a look at. Additionally, the mutual fund calculator on the platform helps compare mutual funds, and choose what is best suited as per your investment goals.