How to Rate Mutual Fund ManagerPosted by somesh mane on October 30th, 2018 Investing your hard-earned money requires careful thought and deliberation. While there are many investment options, mutual funds are gaining notorious popularity among most investors, considering it is a comparatively safer option than directly investing in individual stocks, and the returns (subject to market risks) are higher compared with fixed deposits. Now, before you invest in any of the mutual funds in India, it is important to know the entity who is going to handle your funds - the mutual fund manager. On a daily basis, the fund manager will often be in charge of buying or selling stocks and bonds from the portfolio, taking into consideration the best performing mutual funds. The fund manager can thus be seen as someone who plays a critical role in either making or breaking your investment. Who is a Fund Manager? The fund manager looks at optimizing returns, while at the same time, managing risks for the portfolio. The individual pays heed to quantitative parameter like price-to-earnings ratios, dividends, sales and earnings, among other important elements. The manager shall monitor the financial results of the firms that are in the portfolio and its different metrics. He or she shall also decide which of the stocks will be part of the scheme, and accordingly create a portfolio of assets to meet the objective of the mutual fund. Factoring in the role that a fund manager plays in your investment, it is imperative that you take some time to assess the fund manager. Evaluating fund managers is not just a task undertaken by financial planners and distributors, rather you, as a potential investor, is equally responsible for doing the same, as the fund manager will be the individual with whom you are going to trust your hard-earned money. Not knowing how to identify the best-suited fund manager can prove to be a costly affair. Rating a Fund Manager As you begin the evaluation process, the first point you need to look into is the performance. Performance needs to be the first measurement you need to consider before investing in any of the mutual funds in India. An excellent fund manager is one who is frequently able to surpass the benchmark index, which is a standard against which most mutual funds are measured. Another essential point you need to look into is how long has a fund manager been handling a particular fund. Generally, the longer a manager's tenure, the more likely it is that the individual are performing at an acceptable level for most investors. You also need to look at whether the manager runs multiple mutual funds in India (including all the best performing mutual funds). If yes, it implies that the manager has enough competence in choosing portfolio investments. All about Mutual Funds Mutual funds are a very popular form of investment and a preferred investment route for many. Here, funds are collected from several different investors who share a common investment objective, and the fund managers invest them in bonds, equities, money market instruments and/or other securities. The returns generated from the mutual funds in India is distributed proportionately among the investors, after deducting appropriate expenses. Besides the fund managers, the other essentials that you need to look into before investing is the investment objective, past performance of the scheme, per-unit cost of a scheme, the reputation of the fund house and terms and conditions for liquidation. Knowledge about the above-mentioned points will help you determine which would be the best performing mutual funds in India to invest in. Mutual funds are a suitable option for investors who may do not have large sums of money to invest or those who do not want or lack the time to undertake market research, however, still want their wealth to grow. It is the duty of the fund managers to help identify the best performing mutual funds, and accordingly guide you concerning any queries you may have about parking your funds. The fund managers will invest the collected money keeping in mind the scheme’s stated objective. In exchange for this, the fund house will charge a small fee that gets deducted from the investment. The amount that gets charged as fees is regulated and subject to certain limits, as specified by the regulator for the securities market in the country - Securities and Exchange Board of India. Like it? Share it!More by this author |