Fund Manager Case Study

843 Words 4 Pages
1. What benefits can a fund manager provide to a retail investor? (20 marks)
Fund managers are financial institutions that are responsible for the management and arrangement of collective investments for retail investors (Hunt & Terry, 2014). Funds are actively managed by a fund manager, whom is used to negotiate better deals and provide access to investment opportunities to investors. Utilising a team of analysts the fund manager monitors portfolios of assets on investor’s behalf. Fund managers provide two forms of investment services which include retail investor fund collection and administration and also the investment of pooled funds. Retail investors purchase securities for their own personal benefit/account rather than that of an
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Investors what to ensure the quality of investment and therefore what the quality and expertise of the fund manager is required. Consistent fund performance is a key indicator on the quality of the fund manager and analyst team.
Another benefit of managed funds is diversification of the portfolios which can contain numerous investments in different sectors such as different industries (FundSource, 2016). Diversification of the investments is attractive to investors through the diversification of the investments reducing the risk upon the investor. Fund managers utilize a diversified portfolio to combat risk and provide a better investment through knowledgeable investing (Hunt & Terry, 2014).
Fund managers have access to international markets and investments that others cannot access (FundSource, 2016). Through the use of networks that the fund managers are able to utilize, they can invest in international investment opportunities that one would have to go through a broker if investing personally. This use of fund manager also allows for the convenience of investing without the use of a broker. Fund managers provide professional services and market analyzing to ensure profitable
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This involves the financial institutions channeling the flow of funds between investors and firms. This also involves the institutional and retail investors investing funds by trading securities, utilizing the financial institutions, by which fund managers facilitate this (Hunt & Terry, 2014). Financial institutions are raising funds in exchange for securities, with surplus units allows more investment due to additional income. This also allows for the lending of deficit units to pay of previous deficits. A deficit unit is the spending more than you’ve earned and therefore may need to finance the deficit through issuing of securities (Forgang & Einolf, 2015). This allows for the engagement of securities to be sold and gain the investment required. The arrangement for the investment of the securities occurs through fund managers and other institutional investors, these also supply funds. The fund managers use the surplus units in return for a fee, allocating these surplus units to

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