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What is the Role of a Fund Manager in Mutual Funds Investment

For comparing and selecting mutual funds, the track record of the fund manager counts as a deciding factor. The importance of a fund manager in mutual funds is immense, so much so that most finance portals and journals often monitor and highlight the performances of the leading fund managers in the country.

While comparing mutual funds online and looking at their performances, SIP and lump sum investors often study the review of the fund manager and the performances of the various schemes managed by them. With thousands of crores of rupees in assets under management, fund managers and their investment decisions determine how much return a mutual fund makes.

The role of a fund manager in mutual fund investment includes:

Investment decisions 

The fund manager constructs the portfolio of the mutual fund. They decide the proportion of investment in debts and equities, sectors, and themes. These decisions vary depending on the types of mutual funds. An actively managed mutual fund requires the heavier involvement of the fund manager. A passively managed fund, on the other hand, follows an underlying index and requires fewer decisions. The selection of stocks will also depend on the defined debt-equity proportion of the fund. Mutual funds are often market cap specific, like a large-cap mutual fund. Within these specifications, the fund manager decides which securities to buy and which to sell. Their split-second decisions influence the return of the fund.

Developing an investment and fund management style 

The style of the fund manager also dictates the investments made in the mutual funds. Aggressive fund managers may look for hidden gems in the market and target windfall profit. The more conservative ones may go for picks with steady returns instead. Although not a rule, fund managers are seen picking up a style and sticking to it in their portfolio decisions. Individual investors take note of these decision styles and investment patterns.

Risk analysis 

Mutual funds are influenced by macro-economic factors like economic cycles, government policies, politics, etc. Apart from the market risk, there are events that affect sectors and industries and their business performances. A fund manager has to manage and navigate these various risks while eyeing the returns. A sudden change in interest rate, for instance, can change the returns from a sector or industry. Such sudden or imminent risks need to be managed promptly by the fund manager.


Not every investment decision needs to be made instantly. Fund managers spend a lot of time and effort analyzing the performance of the stocks and bonds held, the factors affecting the price and return of the holdings, earnings and dividends from the shares, and so on.


Fund managers play a significant role in investment decisions. However, if you invest through SIP in mutual funds online, you can monitor the mutual fund portfolio through Tata Capital Moneyfy app, which brings ease to managing your investments and keeping a check on them.

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