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The Basics of Fund Management: Explained

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  Reading time 6 minutes

When it comes to investment, not everyone has the time or inclination to go through the process themselves. This is where a licensed fund management company or an investment management firm, represented by a fund manager, comes into the picture. The media landscape is crowded with investment advice, but licensed fund management companies offer an alternative for those looking for professional help.

What is Fund Management?

This refers to the process of managing investments and assets on behalf of investors, with the goal of achieving a return on investment. This involves making informed decisions on which securities to invest in and managing the portfolio to maximise returns while minimising risk.

What Do Fund Managers Do?

Typically, fund managers are the ones responsible for implementing the right investing strategy and management. They are tasked with overseeing the portfolio’s trading activities and direction, working with analysts to conduct comprehensive research to make the right investment decisions. 

What Do Fund Managers Do?

A good fund manager will surely ask about their client’s financial goals in the short or long term before deciding on the proper portfolio management or investing strategy. A young person in their mid 20s will probably have a more aggressive risk profile, meaning that they’re willing to invest in more volatile assets such as stocks, given that they’re still young and can recover if they lose their initial investment.  This is in stark contrast to a couple in their mid 50s who are looking forward to their retirement. They will likely have a conservative risk profile, meaning their ideal investment asset allocation or portfolio should consist of asset classes mostly with stable returns, such as government bonds or blue-chip equities.

How to Become a Fund Manager?

Singapore offers a thriving ecosystem for aspiring fund managers, providing a wealth of opportunities to establish and grow your investment business.

To become a fund manager in Singapore, you need to meet certain requirements set by the Monetary Authority of Singapore (MAS), the regulatory authority overseeing the financial sector. By obtaining the necessary licenses and adhering to MAS guidelines, you ensure transparency, investor protection, and the overall integrity of the industry.

Additionally, if you plan to operate across borders, it’s essential to familiarize yourself with the Securities and Futures Commission (SFC) in Hong Kong, as it regulates the offering of funds and related activities. Compliance with both MAS and SFC regulations can open doors to broader market access and enhance your business prospects.

At Lanturn, we provide fund administration and fund services, we also offer comprehensive fund formation services. Our expert team guides you through the entire process of setting up your fund, from structuring it to navigating regulatory requirements.

Classifications of Fund Management

Fund management can be classified into three categories; client type, the method used for management, and the investment type. Each of which can be broken down further into different types. 

By Client

When it comes to clients, there are two types, either corporate or personal individual clients. Both may have high net worth, but often individual clients have a smaller net worth when compared to corporate clients.

By Method

Methods in managing funds can come in two ways, either active or passive management. Active management means your fund manager consistently keeps tabs on what is happening in the market; they buy or sell your assets to maximise profits, whereas passive income is the opposite. Your fund manager will likely keep it on an index fund, so you get exposure to all industries available in the market.

By Investment Type

Regarding investment type, it refers to the asset class or types you’re investing in, such as mutual funds or pension funds. These funds will likely consist of investments that are in line with the client’s risk profile that has been assessed by the fund manager, as explained above. One other concept that is closely associated with fund management is hedge fund management. In layman’s terms, hedge funds are similar to regular investing, but the managers employ all sorts of complex instruments in an attempt to “hedge” one investment against the other. It is also riskier since managers will short stocks or other equities to obtain higher returns, but are also prone to bigger losses. Ultimately, fund management in investing is a way for you to protect or increase the value of your money as inflation continues to grow each year. However, not all have the luxury to do their investing by themselves; that is where fund managers can help. Ultimately, they are committed to assisting you in your wealth management needs.

For Your Business Success

Are you looking for reliable fund administration and fund services in Singapore? Look no further; partner with Lanturn. Our comprehensive solutions are tailored to meet the unique needs of fund managers like you. Take your fund management in Singapore to the next level and contact us today to explore how we can support your success.

Schedule a meeting today.

 
Lanturn Content Team

Lanturn Content Team

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