The fund manager is the professional responsible for taking care of the allocation of agents’ equity within investment funds.
Thus, the fund manager has the responsibility of dealing with large amounts of resources, allocating them in order to comply with the investment strategy.
What is the function of the fund manager?
The fund manager’s main attribution is to manage the inflow and outflow of funds from an investment fund , always based on the investment strategy outlined in the fund’s documents.
These professionals have a high level of knowledge about all the products on the market and need the CGA certification to work in the management of resources , which can come from individuals as well as from institutions and families with greater assets.
As he is responsible for allocating resources , the manager has a lot of responsibility, since he has to manage assets that reach billions.
What is the difference between a fund manager and an administrator?
In the structure of an investment fund there are some agents, among them the manager and the administrator.
The administrator is a legal entity authorized by the Securities and Exchange Commission and who must take care of all day-to-day movements within an investment fund.
Thus, while the investment fund manager is responsible for the entire allocation of resources and, mainly, for disclosing and implementing the investment philosophy, the administrator has more operational functions.
Among these functions are:
- Provision of information to shareholders;
- Manage all services;
- Create the fund and register it with the CVM ;
- Draw up minutes of all meetings.
In this way, the manager is the one who will buy and sell the assets and the administrator will be responsible for taking care of the fund’s more general matters.
How much does a fund manager earn?
The fund manager’s salary basically comes from two sources: the management fee and the performance fee .
The management fee is the most common and recurrent in the remuneration of a manager, since it is paid regardless of the will of the fund’s shareholders.
It generally varies from 1% to 2% per year and is levied on the fund’s equity, being provisioned daily.
It is important to emphasize that with a higher management fee, what is understood is that fund management is more complex, that is, it demands greater knowledge and, therefore, should be better remunerated.
On the other hand, the rate that tends to remunerate a fund manager most significantly is the performance rate, which is related to the manager’s ability to overcome the fund’s benchmark.
This benchmark is most often the CDI, however it can be the IPCA and, for equity funds, the Ibovespa.
The performance fee works as follows: in case the CDI rises 10% and the fund rises 15%, the investor has to pay the manager 20% of what exceeded the fund’s benchmark.
Thus, the fund will receive 1% of the 5% that it exceeded in return in relation to its benchmark.
It is important to remember that passive funds cannot charge a performance fee. Thus, the manager’s remuneration is only the management fee.
Investment management: what does it take?
To act as a fund manager, the professional must, in addition to having a lot of experience in the market and knowledge of all investment products, earn the ANBIMA Manager Certification (CGA).
Certification, despite being much more regulatory, guarantees the professional a good knowledge base, however it alone will not guarantee the success of a manager.
For this reason, this professional requires many hours of study and, above all, practical knowledge, since decision-making in the allocation of resources is one of the activities that most demand knowledge.
Thus, due to the complex character of the profession, the certification test is understood by many as one of the most difficult, surpassing even certifications such as the CFP.
What are the other characteristics of being a fund manager?
As previously mentioned, to be able to manage investment funds, certification alone is not everything.
Therefore, practical market knowledge makes such a difference when working with asset management .
However, far beyond market knowledge, managers must have the following characteristics if they wish to succeed in this highly competitive and constantly evolving field:
- Open mind;
- Excellent communication, both verbal and written;
- Emotional control and confidence in your strategies;
- High knowledge of the structure of the operations that will be set up.
In order to achieve good results both for the fund and for the shareholders, the manager must understand that having an open mind is the first step to succeed in this market.
This occurs, since in the management journey many events can go against your strategy and, therefore, having an open mind for new ideas is essential.
Added to this, the versatility to know which asset is best for each moment of the economic cycle and the market, to allocate resources in the best possible way.
In addition, as a manager is one of the fund’s spokespersons, having excellent communication will provide a better understanding of your strategies and decisions, allowing you to gain investor confidence.
In terms of communication, in order to gain trust from shareholders, it is essential to have emotional control, even more so when the market is going against your position.
Finally, high knowledge of the market and the structures of operations allow the manager to make better decisions and know the right moments to enter and exit a position.