Making investments can be a tricky business, regardless of whether you’re a seasoned professional within a major conglomerate, or just an individual wanting to get the most from their money and boost their long-term prospects in the process.
An industry that is built upon the management and evaluation of risk – so much so that some people have compared it to the gambling industry – investment is a particular skill, which is why those who have a knack for turning a profit tend to earn such lucrative salaries.
That said, however, it still doesn’t make it any easier to understand what exactly investment funds are, and what the investment fund managers that run them do on a day-to-day basis.
What is an investment fund?
Rather than managing the long-term prospects of your own money or savings, putting those monies in to an investment fund takes the responsibility of identifying the right schemes out of your hands. While most people are happy to have a savings account with their bank that will pay them back interest over time – this is perhaps the basic and popular form of investment – those who’re seeking a larger profit margin or have higher amounts to deposit may wish to seek a more comprehensive approach.
Banding together the money provided by several different sources, an investment fund will aim to use the higher amount being divulged to maximise the profit being made, therefore increasing the share and worth to each party who stumped up. Investment funds will usually seek to diversify your investment portfolio, meaning that they’ll spread your money around several investment opportunities to maximise the chance of a large profit being made.
The investment fund will be taking a cut of any profit made, however – usually a figure around 1% to 1.5% – so you should be aware of their rates before handing any money over.
What do investment fund managers do?
An investment fund manager is the person in charge of managing the money within individual funds. Responsible for how the money is used, how much is being sent where and acting within the interests of their client, having the right manager can either be the success or failure of individual funds.
While some funds are run by committee, this can cause obvious conflict where difference of opinion is concerned, whereas having an impartial and unbiased central manager – therefore completely removing the influence of individual investors – puts that responsibility on one person, giving the tactics and strategy a singular and targeted focus.