What You Should Know About Portfolio Managers

A portfolio manager is an individual that manages your portfolio. He or she is a trained professional that has the responsibility of making efficient investment decisions on your portfolio.

Without a doubt, one of the most important aspects of succeeding in your investment journey is having a solid portfolio. Your portfolio represents the makeup or totality of all your investments covering various risk levels, a diverse range of industries, as well as different securities.

While an investor can choose to build, maintain, and manage his or her investment portfolio personally, there are situations where having an independent portfolio manager would do the trick.

As the name implies, a portfolio manager is an individual that manages your portfolio. He or she is a trained professional that has the responsibility of making efficient investment decisions on your portfolio.

He or she might be part of a mutual fund outfit, a portfolio management company, or might just be an individual with a fiduciary responsibility of ensuring you get the best out of your investment. The individual or company implements investment strategies and is responsible for managing the day-to-day trading requirements on it.

One key thing about a portfolio manager is that he or she (or the company) is abreast with all necessary information. They are aware of current happenings in the financial market, and consequently have all the required information to be able to effectively determine what to buy or sell.

They also do not function in isolation – they constantly meet with their client investors to determine what the investor’s goals are, offer advice while also sharing the rational or the basis for their advice/decisions.

It is not uncommon to find portfolio managers who focus on one area or the other. In fact, it should raise a question if a company or individual insists that they have the knowledge to handle investments in all industries and of different sizes.

Some managers are better with managing specific kinds of securities over the other. Also, not all portfolio managers can handle huge investment funds/ portfolios. Some can handle large mutual funds and others are better handling tailored individual services.

The investing style of the portfolio managers also often differs. While some are risk averse and conscious of hedging strategies, others are more direct and focused on optimizing gains. In the same vein, some are capable of managing portfolios that are restricted to one country while others can handle international investment funds.

If you have the goal of choosing a portfolio manager, it is important to bear in mind all of these specialization areas so as to find one that can suit your needs. There are no doubt that there are numerous advantages of working with investment portfolio managers.

From the fiduciary responsibility they have to ensure that they act with integrity and in the best interest of their clients, they are also expected to function individually and free from bias. Individual investors by themselves might be emotionally driven or biased but portfolio managers can think more rationally.

They typically help investors determine what the best investment plans are in place for them based on their peculiarities. They also have the right knowledge in place – one the investor would most probably not have by himself not unless he or she is a finance person ordinarily.

As expected, they also possess the required professional qualifications and experiences to back up their service provisions. A good manager would also give personalized management of the portfolios as well as customized investment solutions based on the individual needs of the investors. As said, the advantages are numerous.

However, there still are a few things to consider. For one, portfolio managers are not infallible; they are not gods. They also come with a bunch of fees that might ultimately increase the cost of the investing process altogether.

When it comes to deciding whether or not to use a portfolio manager, it is important that the pros and cons be weighed first. You might realize that you need them but you might also might realize that you’re better off just equipping yourself with the relevant information.

Written by Lawretta Egba.