Fund Management-A Broader Perspective

We live in an era where jobs are taken up not only as a means of the live hood, but also to satiate the passion to do things in a certain way. An exciting option to win over clients to manage their huge corpus funds interests many who have a keen interest in the financial service industry. The asset management is an industry which is anticipated to grow bigger, with trusted advisors the funds are invested in a different mix of investment tools, this is one industry which has scaled back rapidly after the financial crisis with more than a few trillion and an average growth of 6 %.

Types of funds

Broadly analyzing there are two types of funds:

Passive – they monitor the performance of large indices, where the client’s money is invested in the index tracker and then gets allocated to a different array of the portfolio in form of:

  • stock
  • bonds
  • sovereign wealth fund
  • ETF’s
  • Large pension funds among the other basket of fund allocations

The advantage of for the investors is that the fees charges are low and since the investment portfolio has more into long-term debt funds, the risk is minimal, though the turn over may not be very high. The indices like S& P 500 are tracked and then the funds are invested to get a good growth, on a consistent basis and advise the clients on the performances periodically by the fund managers. Exchange traded funds are tradable securities the prices of which fluctuate as the stocks in the stock markets. This type of market is more driven by the external factors and directly depends on the market performances.

Active- this is based more of how the equity markets perform, the Dow Jones industrial average is considered, it is more action-driven and highly volatile equity-based markets, the bond markets are also touched upon, here the investors are more interested in the brand and big players in the markets. The fees charged are considerably higher by the fund managers as the risk exposure is high and the switching if the funds are more frequent in this market.

The different investment terms and tenure are ways to high light how secure the fund is if invested in a bottom up or top down asset performing in the industry. Depending on the performance of the funds in certain sectors like power, manufacturing comes in the top-down category, while the rest including service and enabled services industry come in the bottom down a basket of investment options for clients based on how small or big their portfolio and amount invested in the markets.