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Fund Manager

Management of the core portfolio comprising of stocks and bonds and other assets is the role of a fund manager, and also the most important element in a successful mutual fund investment. On how the manager does his duty, has a major impact on the performance of your stocks on the short run as well as long run.

Role of a Fund Manager

When someone chooses to invest in a mutual fund, it means they will have to gather a portfolio of securities.

  • The fund managers, based on research and analysis, make decisions pertaining to the buying and selling of wealth.

  • The portfolio can be active or passive. In case your portfolio is managed passively, it should be based on a given index and the parts chosen in view of the underlying index.

  • When there is a portfolio that is managed actively, the fund manager chooses the instruments of the portfolio. The fund managers play a very important part in the good performance of active mutual fund.

Duties of a Fund Manager

A. Compliance

The funds must be handled as per the rules set out by the governing body such as the Securities and Exchange Board of India, and such authorities. Such regulations contain various aspects ranging from signing clients to the handling of redemptions.

B. Wealth Protection

The role of the fund manager includes protection of the wealth of the investor. Considering that funds are subject to risks when generating returns and growth, there is flexibility on the investors part in giving the prerogative to the fund manager. Nevertheless, decisions pertaining to the fund manager in regards to the buying - selling of wealth must be carried out after extensive research.

C. Fund Monitoring

The objectives of the investors must be converted into decision as to the investment of the fund. It is a given that the fund managers are viewed based on how effective their fund performance is and how they bring growth against the force of interest and inflation rates.

D. Oversight

  • Fund managers have to get assistance from various professionals and even firms in order to deliver.
  • Duties such as giving out yearly reports, gathering capital, dealing with brokers, etc. are given to third parties.
  • By doing this, the fund managers transfer some of the compliance-related responsibilities to a third party.

How to evaluate a Fund Manager?

Fund managers are very important for the effectiveness and performance of your funds and so it is relevant that you take certain factors into consideration when choosing your manager.

A good investment practice involves paying time and energy to source a good fund manager and management team. One can understand good fund management from a not so good one.

  • He/she should be successful at out running the benchmark continuously.

  • Does the manager keep track of the other institutional investors’ (DII or FII) buying and selling of stocks?

  • Are they adequately experienced with a high compensation?

  • Are they able to identify scripts way ahead of their peers?

  • How often the manager is willing to share the fact of a potential risk with you?

How do Fund Managers Decide where to Invest?

Besides extensive knowledge on the subject and relevant market insights, a fund manager has to gather important insights from the research team. Some considerations include:

A. Checking for shifts in the stock market to analyze the volume of the shifts.

B. Analyzing the competition in the industry to gauge the macroeconomic outlook.

C. An in-depth analysis of the yearly outputs of the companies that the fund manager wants to invest in.

D. Lastly, the above is measured together with the experience of the relevant managers and directors before an investment is made.

Top 10 Mutual Fund Managers

Porinju Veliyath Equity Intelligence PMS

Initiated in the year 2002, this company has risen into a high value PMS in the country that has strong profit traditions.

  • Here, minimal required investment is Rs 5 million in Porinju Veliyath Equity PMS.

  • In the last 5 years, the returns have been around 36%. In the past year, it was 48%.

  • No lock-in period for the investors. You can withdraw any time.

  • This portfolio management does not deal with entry or exit load.

  • PVEI will charge a fixed fee of 2 percent per year, besides a performance fees of 10 percent of the profits above 10 percent every year.

  • When an investment under portfolio management is sold in a year, then there will be a liability of tax at 15% on the profit. When an investment is sold post one year, the profits gathered are free of tax. Dividends gathered in portfolio management are not taxable.

  • Non-resident Indians are allowed to invest in portfolio management non-repatriation and repatriation criteria.

  • Porinju’s EQ PMS is considered as one of the best PMS Services in India

Motilal Oswal NTDO

Motilal Oswal’s next trillion-dollar company is an asset management company that provides portfolio management. The strategy with Oswal’s is good deliveries on returns by investment in small and medium sized capital stocks. This is ideal for those who want to invest for a 3-year period.

  • This PMS invests in 20-25 stocks.

  • Minimum investment required is Rs 25 Lakhs in this PMS.

  • The profits in the past half-decade is 31% and last one year is 18%.

  • They charge fixed fees and based on performance of the PMS.

  • NRI’s can invest in this PMS.

  • Motilal Oswal NTDO is amongst the prime portfolio managers in the country which can be considered to invest in 2017-2018.

Birla Sun life PMS

Established 24 years back, Birla Sun Life Asset Management Company has some expertise to boast on their line of portfolio management services. This is inclusive of a large assembly of investment options. Birla PMS is a business investor with an eye for enterprises that are valued at less than they their actual worth, with possibilities of future growth. There are various portfolios which are categorized along a minimum amount, period, and investment objective. The following are the portfolios-

  • Core equity portfolio – Minimal Rs 5 million in investment. Time - 1 to 3 years.
  • Customized Debt Portfolio – Rs. 25 Crores.
  • Select Sector Portfolio – Rs 25 Crores/SEBI compliance, 3 months – 36 months.

ASK India Select PMS

ASK Investment Managers are asset management gurus who serve the interests of domestic and international investors. Backed by a strong research team and flexible consultancy, ASK India is known for the risk minimization together with quality in growth. Asset classes death:

  • Large cap
  • Mid-cap
  • Small-cap
  • Multi-cap
  • Value and growth
  • International assets

  • They 2.5 percent as fixed fee of portfolio value. This is charged apart from the real investment such as brokerage fee, custodian expenses etc.

  • Performance fee – There is a fixed fee of 1.5% of portfolio + along 20% of gains to be paid to them over and above 10% of profits.

Neelesh Surana, Mirae Asset Global Investments

  • Mr. Surana has displayed a regular delivery when it comes to outrunning between two contrasting outputs. This has earned him the name of being a dependable stock picker. Also, worth notice is that both the funds, Emerging Bluechip and India Opportunities, continue to enjoy the best risk-reward profiles in their respective categories.

  • The exuberance around the mid-cap space has posed a challenge to managing his mid-cap fund, Emerging Bluechip, but Surana has been able to mitigate risk by focusing on the larger mid-caps. Mr.Surana has felt the requirement to go for stocks deeper down the market cap ladder to generate alpha, the market scenario has called for greater deliberation in existing stocks.

R. Janakiraman, Franklin Templeton Mutual Fund

  • R. Janakiraman’s heavy bias towards quality puts him at odds with the market’s indifference to the same in recent months.

  • Certain that as bull market matures there will be more liquidity that will provoke unrequired re-rating of bad businesses.

  • Believes that same outperformance levels throughout can cause someone to make low quality stock picks in the portfolio.

  • Made efforts that such entities do not come into his funds.

A. Businesses with high return on capital. B. Healthy cash flows and low capital intensity. C. Firms benefiting from domestic discretionary demand.

Sohini Andani, SBI Mutual Fund

  • Performer with competence to handle two distinct mandates— SBI Bluechip and SBI Magnum Midcap.

  • Says that market speed raise surprised her.

  • Estimates the valuation re-rating happened fast due to a surge in liquidity in absence of improved corporate fundamentals.

Andani has been hesitant to chase the returns by paying higher prices, which has partly contributed to the recent under-performance in her funds, relative to the market. Still, she is comfortable not participating in certain pockets in such a high momentum market, knowing it would impact her funds’ near-term return profile.

Chirag Setalvad, HDFC Mutual Fund

  • Chirag Setalvad, joined HDFC Asset Management in 2007.

  • Popular in the mutual fund industry for his investment skills and performance of the HDFC Mid-cap scheme, which he has managed for close to six years now.

  • This fund has posted close to 47% absolute gains in the past three years and about 11% returns in the past one year. His Style and Top Picks: If understanding the business of the company in which he invests is a top priority for Chirag, paying a reasonable price for it is also equally important for him.

Vinit Sambre, DSP Blackrock Mutual Fund

  • Vinit Sambre’s positioning and stock picking has made him the best in the small- and micro-cap space of the recent years.

  • Good analytical rigour, patience with stocks, and the discipline. Pursuit of alpha resulted in a strong showing by DSP Black-Rock Micro Cap.

  • While market scenario under goes change, Sambre realigns his approach to invite better money flows, the fund’s portfolio enlarged and it became difficult to build higher positions of similar stocks.

  • Due to limited liquidity, Sambre observed larger enterprises.

Roshi Jain, Franklin Templeton Mutual Fund

  • She is into basic research-oriented fund manager, she deals with stocks and related sectors that show tendency for structural growth.

  • Roshni has moved towards large-caps in her multi-cap fund that often takes a highly concentrated exposure in its top bets.

  • The outsized positions in individual stocks show an aggressive approach. Jain says its largely a function of the upside potential in the market. Despite the aggressive tilt, Jain has managed to protect downside much better than many peers over the past five years.

FAQs on Fund Managers

Are fund managers necessary?

Yes. Fund managers are very important for the effectiveness and performance of your funds.

What is a fund management?

In this, someone manages the portfolio of stocks, bonds and other assets for you.

What is a fund management companies?

This is an operation that invests its client’s pooled funds towards securities that match stated financial objectives. They provide investors with enhanced diversification and options compared to what they had by default.

What skills do you need for asset management?

  1. Previous experience in property asset management

  2. Financial modelling skills

  3. Reasoned decision making

  4. Increasing income streams

How do you become a fund manager?

Preparing yourself for a role of this stature will require huge determination and dedication and starting early is the only way to do it. So, here’s how 10 practical steps can help a graduate become a successful Fund Manager.

How much money does a mutual fund manager make?

Average annual salary - Rs 1,220,838. The rest depends on his experience.

What do you do as an asset manager?

Think of an asset manager as a custodian for your money. They have studied assets and investments. They look at all your assets and show you how to invest and what to do with them. They will also identify where your risks and your potential gains lie.