As the global economy continues to evolve, it brings not only fresh opportunities but also new challenges to the investment landscape. In particular, it oftentimes makes the task of managing a portfolio too complex or time-consuming for a non-professional to handle. This is where funds management comes in – find out what it’s all about below!
What Is Funds Management?
Funds management involves managing investment portfolios on behalf of individuals, corporations, or institutions to help them achieve their financial goals. Typically, a fund manager is responsible for making investment decisions, selecting suitable securities, and keeping the portfolio’s risk profile under control.
What You Need To Know About Funds Management
Investment portfolios may include a range of assets, such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), real estate investment trusts (REITs), and beyond.
As follows from the funds management definition, the goal of the specialists you hire is to balance the portfolio’s return and risk objectives while ensuring that the investments align with your vision.
There are different types of funds management strategies, including:
- Active, which involves selecting securities and making frequent changes to the portfolio to generate higher returns than the market.
- Passive, also known as index investing, involves investing in a portfolio of securities that track a market index’s performance. This means that rather than attempting to outperform the market, passive fund managers aim to replicate the performance of a particular benchmark.
- Hybrid, which is a combination of the two funds management approaches mentioned above.
Before opting for funds management, it is essential to consider your investment goals, risk tolerance, and time horizon. It is also important to understand the costs associated with this service, such as management, performance, and transaction fees.
When choosing a fund manager or funds management firm, it is crucial to consider their investment philosophy and approach. Additionally, you must review their track record as a means of ensuring that they align with your expectations.
