Fund Manager

A fund manager is responsible for implementing a fund's investing strategy and managing its portfolio trading activities. A fund can be managed by one person, by two people as co-managers, or by a team of three or more people. Fund managers are paid a fee for their work, which is a percentage of the fund's average assets under management (AUM).

To qualify for a position in fund management (mutual funds, pension funds, trust funds or hedge funds), individuals must have a high level of educational and professional credentials and appropriate investment managerial experience. Investors should look for long-term, consistent fund performance with a fund manager whose tenure with the fund matches its performance time period.

The main benefit of investing in a fund is trusting the investment management decisions to the professionals. The quality of the fund manager is one of the key factors to consider when analyzing the investment quality of any fund.

Most fund managers often pursue a Chartered Financial Analyst (CFA) designation as a first step in becoming the head stock-picker for a portfolio. CFA candidates undergo rigorous coursework pertaining to investment analysis and portfolio management. Typically, these analysts assist portfolio managers with individual research on investment ideas and subsequent buy, sell or hold recommendations. After a number of years working for the fund, familiarity with fund operations and management style aid in the analyst in a career path. Successful CFAs build a quality case for an internal promotion to manager if the opportunity arises.

Primarily, fund managers research and determine the best stocks, bonds or other securities to fit the strategy of the fund as outlined in the prospectus, then buy and sell them. At larger funds, the fund manager will have a support staff of analysts and traders who will perform some of these activities. At some investment companies, multiple managers will oversee client money, and each may be responsible for a portion or make decisions via committee. Some other responsibilities of the fund manager rule include preparing reports on how well the fund is performing for clients, developing reports for potential clients to know the risks and objectives of the fund and identifying clients and companies who may make good fits as clients. 

One of the most iconic fund managers in history piloted Fidelity Investments' Magellan Fund. Peter Lynch managed the company's notable equity portfolio from 1977 to 1990. Lynch was a proponent of selecting stocks in industries with which he was most comfortable. Magellan's chief amassed remarkable average returns of 29% per year throughout his tenure, growing AUM from $20 million to $14 billion.

One of the longest-tenured fund managers is 85-year old Albert "Ab" Nicholas. Founder of the Nicholas Company, the seasoned portfolio manager has run the five-star Morningstar Nicholas Fund since July 14, 1969, besting the S&P 500 Index each year from 2008 through 2014.

Hedge funds differ from mutual funds in that hedge fund portfolios require large investment minimums only from accredited investors. Ken Griffin's Citadel Global Equities hedge fund returned 13% after fees in 2017, falling short of the S&P 500 by nearly 6%. Griffin had a net worth of $9.1 billion as of 2018. Buying and selling stocks from his Harvard dormitory in the 1980s, Griffin leaped right into the world of private equity management, launching Citadel with $4 million in 1990.