Hello Readers!

We all know that the mutual fund scheme in which we invest is managed by individual experts popularly known as Fund Manager. The fund manager of your scheme is responsible for managing your investment, your asset allocation, portfolio review, and many other necessary things.

Fund managers are part of the asset management company or precisely we should say “the asset manager”, which owns the mutual fund scheme.

The investment style used by fund manager often reflect the strategy used by the asset manager, there is a perfect harmony between both. However, fund managers work effortlessly to bring a unique flavor to the practice of security selection and portfolio construction.  

The long-term growth of your investment depends on how your fund manager or asset manager carries out your investment. Selecting an appropriate asset manager or fund manager will make an impact on the growth of your investment, but it is a bit confusing to decide, one of the two, and which should take priority?

WHAT ASSET MANAGER BRINGS IN YOUR INVESTMENT?  

Asset Manager is dedicated to defining and owing to the processes for managing the mutual fund scheme that they own.  Most of the asset managers have a specific security selection process and guide for portfolio construction, which decides a frame for the fund managers to operate the fund scheme.

Security process selection and portfolio construction are ideologies followed by every asset manager, but the question is what makes one asset manager different from other or best from the others. So basically, it is the risk management process that can distinguish asset managers and impact your overall experience.

The role of the fund manager is not confined to a single fund scheme and he has to ensure that each of the schemes is different from each other. He has to pay equal attention to every kind of scheme he owns.

There are two kinds of asset managers, one who does not launch multiple schemes and focuses completely on a handful of schemes to build core competence. Then there are other fund managers that end up taking too many funds under their control. For these asset managers, there is a call for adequate team size, so that every scheme is managed properly.

So, before you decide to go with an Asset manager you need to analyze the asset manager and its quality of management and consistency. The size of the asset manager and how much schemes it manages are secondary things to be analyzed. In fact, analyzing these things will make you understand the ability of the asset manager, to manage its basket of schemes suitably with the process and team it has.

WHAT FUND MANAGER BRINGS IN YOUR INVESTMENT?

Well, the fund manager frame to work is already decided by the processes carried by the asset manager, however, an individual’s unique and innovative mind will have a separate influence on security selection. Not only that, it is the individual’s ability to ride market volatility which can also make a difference to the final outcome.

Although investment processes of an asset manager and fund manager can be similar, investment decisions like when to buy, when to sell, how long to hold, are decided by the fund manager. These decisions do have their impacts which creates a difference in returns, even from two portfolios with the same stocks.

Comparatively, we can say that, besides having similar processes carried out in managing the schemes, the fund manager does influence the outcome greatly. However, the unique ideology and preferences of the individual, in a mutual fund portfolio can be sometimes detrimental, if the choices made are rigid and hard for them to admit their mistakes. This is the sole reason, why the choice of an asset manager becomes important, which strictly follows the risk management processes.

One more reason to prefer asset manager over fund manager is, your fund manager can resign any day and move out to work with a different asset manager, leaving you behind with the scheme you invested in for another fund manager.

If we conclude, we can say that focus on both these variables, asset manager and fund manager is necessary. At the same time, you should also analyze the bond that both of them share, and how much similarity is there in their strategies. The good bond they share and more similarities in their strategies define a good growth to your investment in the long-term.

For any kind of investment query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.

Happy Investing!

(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).