Do you know the person managing your money? If you don't, you need to; knowing who is managing your fund is as important as knowing where your money is. It's absolutely essential, and you should not hesitate to ask as many questions as you wish so that you're sure you're comfortable with where your money is being invested. This article will give you some of the information you'll need before you make important decisions about your investment, and it should help you find your way through the sometimes confusing ins and outs of fund management.
It is imperative that you know who the fund manager is and what his or her background and skill level is. You should keep in mind the following points. The fund manager should meet the following requirements or willingly disclose the following information so that you can make an informed decision(s) about the manager:
- Can communicate fluently with you in your native language (for clear, effective communication)
- Has the requisite degrees and certifications (must be qualified to manage your money effectively)
- Be transparent about background and other positions held (to help reassure you that he or she has the necessary experience)
- Be transparent about his or her degree of management experience (to ensure that he or she can handle your investments responsibly)
- Be willing to disclose the amount of money he or she held in previous management positions (must be comfortable with the pressures of handling your money)
- Has spent adequate time in his or her current position (so as to be thoroughly acquainted with the market(s) you wish to invest in or are interested in learning more about)
- Willingly disclose any previous fund management positions held that may have been similar to the current one (so as to ensure his or her experience will enable him/her to make prudent decisions about your money)
- Willingly disclose the returns his or her previously managed funds achieved while he or she was in control (so as to establish a track record and solid returns results).
Even though this information is important to obtain on fund managers, it isn't always easy to get. With a team-managed fund, it is actually immaterial, since one manager is no longer in charge of the fund.
Funds management software has made it possible for a fund manager to simply follow the lead of computer-generated information, thus making the actual manager's experience almost unnecessary. However, this is only the case when a computer is being used thusly: the fund manager is still essential in all other situations.
Besides knowing who your fund manager is, it is also important to thoroughly investigate the fund management company that the fund manager works for. Much of the time, team management is used for a fund, rather than a single manager. In this case, the company is what's important. These are some things you should investigate to make sure it's the right one for you:
- What are the company's assets under management in total? (If overly large, the company may not be able to spend adequate time and effort managing your account)
- How long has the company has been in business? (Ensure they've been in business long enough to have adequate experience in the field, for best possible performance)
- What is the company's history? (Past history should show solid and consistent performance)
- How big is the staff? (Should ensure consistent day-to-day management of your investments and should ensure that you can contact someone easily who will have knowledge of your fund)
- Does the staff speak your native language? (Should ensure that you can easily communicate with them)
- The numbers of funds run by the company (how much similar experience does the company have?)
- The performance of their funds when viewed compared to similar funds run by the competition (how do the company's assets translate into concrete financial results?).
Your fund's prospectus should have roughly 75% of this information in it. Although the information may not be vital to your decision to invest, most funds’ management companies will be happy to give it to you so as to make it inviting for you to invest with them. So don't hesitate to ask questions until you're satisfied. You are absolutely entitled to know who's managing your money.
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