Back to School: What is a Fund Manager?

Guest host Eli Flood investigates these big money bosses, and what they do to help you, with Ian Tam

Ruth Saldanha 2 September, 2020 | 1:29AM

 

 

Eli Flood: Hello. My name is Eli Flood. And today, I will be talking to Ian Tam about fund managers. Hi, Ian.

Ian Tam: Hi, Eli.

Flood: So, what is a fund manager?

Tam: What a great question, Eli. A fund manager is basically someone who is responsible for taking care of your investment portfolio. But maybe another way to explain it to you is, if you think about a hockey team – I know that you play hockey. So, a fund manager is kind of like the coach of the hockey team. So, he or she is basically responsible for looking at the ice, seeing how the players are doing and if it makes sense, maybe take some of the more tired players off the ice, replace them with somebody else. So, essentially just making sure the team is operating to the best of its ability. So, just like a hockey coach, a fund manager is going to be looking at your portfolio and making sure it's operating to the best of its ability as well.

Flood: What does a fund manager do all day?

Tam: Yeah. So, a fund manager is going to be monitoring the status of the investments in your portfolio. So, again, if we use that hockey example, he's going to make sure that maybe if the players are getting tired, they will take them off, swap them with somebody else. Or if there's just a really bad player on the team, he might actually trade that player away and replace it with a completely new player. So, just like that, a fund manager is going to be looking at your portfolio of stocks and bonds and if it makes sense, he might actually trade a few of those stocks and bonds away to get a better replacement for the portfolio.

Flood: Why do people need fund managers?

Tam: Yeah. So, people need fund managers because many of us are not really experts at investing just like many of us are not experts at hockey. So, sometimes it makes sense for people that are maybe less interested or again, just have really no expertise in the area of investing to hire someone like a fund manager to take care of your portfolio for you.

Flood: Thank you for your time, Ian. For Morningstar, I'm Eli Flood.

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Ruth Saldanha

Ruth Saldanha  Ruth Saldanha is Senior Editor at Morningstar.ca

 

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