Management And Arrangement Of Collective Investments For Retail Investors

843 Words Aug 18th, 2016 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 organisation (Hunt & Terry, 2014). These retail investors trade in small amounts compared to institutional/organisational investors whom have the capital to make larger trades.
The use of fund managers/management includes a range of advantages. The main advantages include; diversification of risk, buying strength, expertise, access to international markets and investments and convenience (FundSource, 2016).
The main benefit of using a fund manager is the investment management knowledge of a professional (Investopedia, 2016). 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…

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