Investing is far more important than just saving money these days, as the effects of inflation can deplete money of its original value. There are several options for investing, and people often prefer to hire fund managers to plan and manage their investments according to their financial goals.


A mutual fund manager is a financial expert who plans investment strategies and oversees various types of funds, including mutual funds, pension funds, trust funds, hedge funds, and other financial entities. This role can be performed by either an individual or a team of professionals.


Fund managers earn a fee for their services, which is based on a percentage of the average Assets Under Management (AUM). Investing in a fund managed by a professional means putting your trust regarding your money in their investment decisions with an expectation that their decision will be more beneficial to you since they are the experts in the field.


However, it is advised that even after putting your bet on a professional to invest your money, you should also do thorough research regarding the funds you are investing in. Here are some of the things mutual fund managers take into account when making an investment decision.


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Setting Investment Goals and Risk Parameters


Fund managers usually start by defining clear investment objectives and risk tolerance based on the fund's mandate and the preferences of its investors. This foundation guides them in selecting the right mix of assets, sectors, and securities for a particular individual's portfolio.


Conducting Detailed Research


To find suitable investment opportunities, fund managers analyse sectors, companies, and market trends in detail. This research helps align potential investments with the fund’s objectives.


Managing Risk


Fund managers use various risk management strategies to minimise potential losses and handle market volatility. These include diversification, hedging, and adjusting the size of their positions.


Evaluating Performance


Fund managers continuously evaluate the fund’s performance against relevant benchmarks and provide regular updates to investors. This ensures transparency and effective communication, informing investors about their fund's progress.