Understanding Fund Management

Understanding Fund Management

Fund management, also known as asset management, is the supervision and managing of a financial institution’s or third party’s money, be it for the purpose of investment, wealth or asset management. The fund manager makes sure that the maturity schedules of the deposits or funds and be returned to the investors accordingly with the agreed interest.

Types of Fund Management

There are several types of Fund Management and the ones generally managed by fund management professionals include:-

  • Mutual Fund
  • Trust Fund
  • Pension Fund
  • Hedge Fund
  • Equity Fund Management

When classifying management of a fund by client, fund managers are usually personal fund managers, business fund managers, or corporate fund managers. A personal fund manager generates deals with a small quantum of investment funds and an individual manager can manage multiple lone funds.

Providing Investment management services includes extensive knowledge of:-

  • Financial Statement Analysis
  • Creation and Maintenance of Portfolio
  • Asset Allocation and Continuous Management

Who is a Fund Manager?

A fund manager is necessary for the management of the complete fund under all circumstances. This manager is entirely responsible for strategy implementation of the decided fund and its portfolio trading activities. Connecting a good fund management professional usually needs trial and error combined with particular aid from investors in a similar position.

Generally, the investor will permit a fund manager to handle a limited fund for a specified period of time to assess and measure the success in proportion to the growth of the investment property.

Fund management uses its means of making decisions with the help of ‘Portfolio Theory’ applicable to different investment situations. A fund manager can also use multiple such theories for handling a fund particularly if the fund includes multiple kinds of investments. The managers are paid in the form a fee for their work, which is a percentage of the overall ‘Assets under Management’.

The qualifications needed for a position in a fund management institution requires a high level of educational and professional credentials like a Chartered Financial Analyst (CFA) accompanied with relevant practical investment managerial experience that is usually decision making in portfolio management. Investors are on the look-out for consistent and long-term fund performance whose duration with the fund shall match with its performance time period.

Responsibilities of the Fund Manager

The fund manager is the center of the complete investment management industry responsible for investing and divesting of the investments of the client. The responsibilities of the Fund Manager are as below:-

Asset Allocation

The class of asset allocations can be debated but the common divisions are bonds, stocks, real estates, and commodities. The class of assets exhibits market dynamics and a variety of interaction effects, that makes the allocation of money amongst different asset classes causing a significant impact on the targeted performance of the fund. This aspect is essential as the endurance of the fund in tough economic conditions will establish its efficiency and how much return it can obtain over a period of time under all situations.

Any successful investment relies on the asset allocations and individual holdings for outperforming certain benchmarks such as bond and stock indices.

Long-term Returns

It is essential to study the proofs of the long-term returns against a variety of assets and holding period returns (returns accruing on average over various lengths of investment). For instance, investments spread across a very long maturity time period (more than 10 years) have noticed equities producing higher returns than bonds and bonds producing greater returns than cash. This is because equities are riskier and more volatile than bonds which are in turn riskier than cash.

Diversification

Going hand in hand with asset allocation, the fund manager has to consider the degree of diversification which is applicable to a client in accordance with their risk appetite. Consequently, a list of planned holding will have to be constructed deciding what percentage of the fund should be invested in a certain stock or bond. Impactful diversification needs the management of the correlation between the asset and liability return, internal issues related to the portfolio and cross-correlation between the returns.

Labuan Fund Manager License

Labuan Fund Manager License enables an experienced and qualified person, for valuable consideration, offers management services that can include investment advice or administrative services in respect of securities for the intent of investment, including dealing in securities. For a Labuan Fund Manager undertaking Islamic fund management activities, its operation shall also comply with Shariah principles.

Should you or your company has relevant experience in investment portfolios including asset management and would like to take your business to another level, do reach out to our QX consultants to know more about acquiring a Labuan Fund Manager License at +60 3 9212 6940 or consultant@qx-trust.com for a complimentary consultation.