A mutual fund manager manages the money of investors. They decide on an investment strategy and play a very important role in the allocation of funds. A well-managed fund is one that holds good investments. Every fund has around twenty to twenty-five holdings, of which around ten holdings are considered as the Top 10 holdings. Mutual funds are rated according to their holdings, and the higher the rating, the better is the performance of the fund. Before we understand the role of a mutual fund manager, let us understand what a mutual fund is and how it works.

Understanding Mutual Funds

A mutual fund is an investment portfolio that is managed professionally by the fund manager. Money is pooled through various investors and invested in stocks, bonds, shares, short-term money market instruments and other securities. These funds are traded in the stock market and their performance depends a great deal on the composition of the portfolio. Now, you may think, what does a portfolio comprise? Well, a portfolio is nothing but the group of investments which we discussed mentioned in the previous paragraph. These holdings are the securities or shares or any other instrument in which the fund has invested. The discretion of investing lies in the hands of the mutual fund manager. However, the investments are made after careful research and analysis. It is the responsibility of a manager to ensure that the net asset value (NAV) of the fund grows and the fund performs well.

Mutual funds are available in the form of units, and their price in the market is known as the Net Asset Value (NAV). This NAV may fluctuate according to the performance of the fund. However, the units will remain the same. Units are like the number of shares you hold; the value of shares may change in the market, but the number of shares you hold will remain the same. Similarly, your unit holdings will not change, but the net asset value may change according to the changes in market conditions.

Understanding The Mutual Fund Manager

A fund manager is one who is responsible for preparing the investment strategies to ensure that the fund performs well and gives good returns to the investors. The profit that is earned through these investments is distributed to the investors. The manager should have professional knowledge and experience. The credentials of a fund manager are very important. One fund can have either a single fund manager or multiple managers. These managers are paid a fee, which is known as the fund manager's fee. It is a percentage of the fund's average assets under management.

Though mutual fund investments are subject to market risk, they are a bit safer than other investments. One reason for this is that mutual fund managers manage them professionally.