Investment manager

Investment managers handle different types of investment funds, like mutual funds or pension funds.
Investment manager
3 min

Investment managers, who can be either individuals or organisations, specialise in planning and executing strategies to invest and grow their clients' capital. They meticulously analyse market trends, assess financial risks, and make informed decisions to optimise investment returns. Investment managers are also known as asset managers, portfolio managers, or wealth managers, and their clients generally consist of individuals, governments, institutional investors, insurance firms, etc.

In this article, we will explain what an investment manager is, their roles and responsibilities, the skills and qualifications required to be one, and how they differ from an investment adviser.

What is an investment manager?

An investment manager is a specialised finance professional who manages and allocates funds to different portfolios on behalf of their client. The main responsibilities of an investment manager are to generate good returns on investment, protect the capital, and generate consistent returns for their individual or institutional clients. They do so by continuously monitoring, analysing, and executing trading options in the stock market as opposed to passive investment strategies.

Investment managers have a comprehensive understanding of the financial objectives of their clients, based on which they devise strategies and make decisions.

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Roles and responsibilities of an investment manager

Investment managers can be single consultants or large fund houses with a global presence. They closely follow all market activities and other socio-economic and political developments across the globe to understand patterns and identify trends.

Based on this, they make investment decisions for the clients to ensure their portfolio fulfils their financial objectives.

Here is a detailed breakdown of the roles and responsibilities of investment managers:

1. Asset allocation

This is the first step of the investment strategy, where the asset manager has to understand the financial objective and risk-return expectations of the client. Based on this, they formulate a strategy to deploy the capital of the client in the right proportion to various asset classes like bonds, stocks, commodities, or real estate that align with their needs.

2. Research and analysis

In this step, the investment manager looks at the economic indicators, global tailwinds, and market trends, and also researches the fundamentals of companies that are seen as good potential opportunities for investment.

With this analytical approach, the investment manager ensures there is an alignment between the investment choices and return expectations of the client.

3. Portfolio construction

The investment manager devises a well-balanced portfolio consisting of different financial instruments like bonds, shares, stocks, and other commodities to ensure a diversified investment strategy.

The aim of allocating different asset proportions is to maximise gains and mitigate risks for the client.

4. Monitoring and rebalancing

Once a well-balanced portfolio has been constructed, the investment manager continually monitors the performance of the portfolio against market benchmarks. If the market conditions change or fluctuate, the investment manager makes the necessary changes by divesting or investing and buying or selling assets to ensure the portfolio reflects the financial objectives and risk tolerance of the client.

5. Risk management

Risk management is important for an investment manager in order to minimise any reduction in asset value and mitigate losses. For this, they apply various techniques like utilising derivatives for hedging, ensuring adequate liquidity, using financial instruments such as options and futures to protect against adverse market movements, or applying stop-loss orders to stop significant portfolio declines.

6. Client communication

Investment managers are also tasked with maintaining regular communication with their clients to keep them in the loop. They provide periodic updates to the client on the funds’ performance, discuss if adjustments in investment strategies need to be made, and provide a general overview of the market conditions.

As a result, the client is always well informed and will be able to make the right decisions at the right time to achieve their financial goals and secure their future.

Also read: What is lumpsum investment

Skills and qualifications required to become an investment manager

To be a good investment manager, you need a combination of experience, knowledge, and critical decision-making skills to ensure you can deliver the best results for your client. Here are some of the key qualifications shared by the best investment managers:

1. Educational qualifications

To be a qualified investment manager, you would require a bachelor’s degree in the field of finance, economics, and accounts as the minimum requirement.

More advanced degrees such as CFA (Chartered Financial Analyst), CA (Chartered Accountant), and MBA in Finance also add a lot of weightage to a candidate’s profile. They can strengthen their chances of becoming investment managers.

2. Analytical skills

Strong analytical skills are critical for investment managers as they need to study the markets, have an in-depth understanding of regulatory environments, and be on the lookout for new and emerging trends.

They also need to be proficient in the use of financial software and tools and statistical analysis to ensure they make well-informed decisions.

3. Risk management

Risk management is a crucial skill that investment managers need to develop to minimise potential losses for their clients. They should be able to employ strategies like hedging to prevent losses, diversification, and using options and derivatives to safeguard the client's investment.

4. Communication skills

An investment manager's ability to communicate clearly and logically with clients is important, as they have to relay complex market data points to clients effectively and easily.

5. Emotional discipline

The markets are a roller coaster ride that fluctuates periodically. In such a scenario, emotions can run high, especially if the market crashes. An investment manager should be able to avoid stress, make the right decisions, and inspire confidence in clients.

6. Technological proficiency

Investment tools and software are becoming increasingly technical and sophisticated. An investment manager should be up to date on the latest developments and able to use financial software and databases easily to make sense of all the information and distil it into useful insights.

7. Regulatory knowledge

The financial markets have very strict norms and regulations. Hence, it is of utmost importance to know the legal framework, fiduciary duties, and do’s and don’ts, as they directly impact the client’s wealth.

Also read: Why invest in mutual funds based on past performance

How to become an investment manager

To embark on a career in investment management, you must acquire the necessary experience, academic training, and specialised skills. These are crucial for effectively analysing financial markets, managing portfolios, and comprehending economic trends.

1. Educational background

You need to obtain a bachelor's degree in finance, economics, business, or a related field in order to meet the minimum qualification requirement. Similar courses in statistics, accounting, and financial markets can also be helpful.

Many investment managers also pursue degrees, such as an MBA, CFA, or CA to improve or enhance their credentials and add more weight to their profile.

2. Gain practical experience

Internships are a great way to gain entry into the field. You can apply for internships at big multinational asset management companies, financial firms, and investment companies to understand the roles and responsibilities that come along with being an investment manager.

You can also apply for roles such as market analyst, portfolio strategist, or investment coordinator, which will help you gain valuable experience in managing a portfolio and analysing market trends.

As you gain more experience, your skills will become sharper, unlocking new opportunities such as Senior Market Analyst, Asset Manager, or Chief Investment Officer, which gives you authority and more decision-making prowess.

3. Skill development

Analytical skills: Enhance your ability to analyse financial statements, economic indicators, and market trends effectively.

  • Tech savvy: Develop proficiency in financial modelling and become adept with software tools essential for portfolio management.
  • Effective communication: Refine your written and verbal communication skills to effectively convey investment strategies to clients and stakeholders.
  • Risk management: Acquire knowledge of various risk assessment tools and methodologies to safeguard portfolios against potential losses.

4. Licensing and regulatory compliance

SEBI requires investment managers (or advisers in India) to register with them according to their role in the firm. You may have to pass certain examinations to demonstrate your knowledge and competence in financial regulations and practices.

How to choose an investment manager?

Choosing the right fund manager depends on your goals and objectives since different fund managers have different expertise levels. Here are the basic criteria that you should apply for selecting a suitable manager:

  1. The team and the firm
    Since this is going to be a long-term engagement, it is vital to understand the credentials of the team, their track record, and how well they can grasp your financial objectives.
  2. Investment methodologies
    You need to get a basic idea about the firm’s investment philosophies and how it manages its investments during market lows and highs.
  3. Liquidity
    Liquidity measures how quickly investments can be converted to cash. If you have any liquidity restrictions, it should be specified upfront. Generally, most portfolio assets should be sellable within 10 days, though some may take longer.
  4. Past performances
    While not all past performances provide a clear picture of the future, it is advisable to look at the performance record of the firm over the last 3, 5, and 10-year period.

Difference between an investment manager and an investment adviser

The terms investment manager and investment adviser are often used interchangeably. However, both their roles and scope vary. While both these professions offer financial advice to their clients, the nature of their responsibilities is different.

Investment managers

The primary responsibility of an investment manager is to manage the investment portfolio of their clients, who could be individuals, businesses, governments, financial institutions, insurance firms, etc.

They need to make the right asset allocation, research and analyse the markets, construct the right portfolio, and continually monitor and manage risks to meet the financial objective of the client.

Investment advisors

Investment advisors provide personalised investment advice to clients by doing thorough market analysis and tracking movements in the market to understand trends and cycles.

Investment advisors offer guidance on investment strategies after understanding the entire financial situation of the client and creating a customised plan to help them reach their goals. They generally have a fiduciary duty to act in the best interest of clients since their compensation is directly tied to the growth of the client’s portfolio.

Some financial advisors may also offer portfolio management services, but their fundamental role is to provide personalised guidance and recommendations on investment decisions to clients.


Becoming a successful investment manager is an art as well as a science. It is a blend of the right education, hands-on training, critical thinking, and effective communication abilities. While the world of investment is dynamic and changes at the drop of a hat, the investment manager has to go a step beyond to recognise patterns and analyse trends to deliver the desired returns for the client.

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Frequently asked questions

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.

Where can an investment manager work?
Investment managers can find employment in various financial institutions, such as banks, brokerage firms, credit unions, and insurance companies. Career opportunities in this field include roles such as financial analyst, fund manager, portfolio manager, risk manager, hedge fund manager, alternative investment analyst, stockbroker, risk analyst, ratings analyst, and private equity associate, among others.
What is the typical fee structure for services provided by investment managers?
Investment managers typically charge a fee based on a percentage of the assets under management (AUM). This fee generally falls between 0.5% and 2% per year. Additionally, some managers may impose a performance-based fee, which is a share of the portfolio’s gains. This fee structure aligns the financial interests of the investment manager with those of the client, as both benefit more when the portfolio performs well.
What methods do investment managers use to keep abreast of market developments and investment prospects?
Investment managers use various strategies to stay informed about market conditions and investment opportunities. They conduct thorough research and analysis of financial statements, economic indicators, and market trends, subscribe to industry publications, use advanced financial modelling software, and attend conferences. Regular discussions with financial experts and analysts further enhance their insights. This continuous learning process helps them make well-informed decisions for their clients.
Is an Investment Manager the Same As an Advisor?
The term "financial advisor" is a general term used to describe a broker or registered representative. In contrast, "investment adviser" is a legal designation for an individual or firm registered with SEBI. An investment manager is a specific type of legally recognised financial adviser.
What Is the Difference Between an Investment Manager and a Fund Manager?
Investment managers concentrate mainly on individual securities and bond investments, whereas fund managers oversee mutual funds composed of multiple securities and assets, often customised for specific market sectors.
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Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information 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.