An investment fund is a pool of money belonging to a number of different investors. which is used to collectively purchase securities (eg stocks, bonds or other assets). This method of investing helps to manage the risk profile of each individual’s investment portfolio and allows them to have access to a broader selection of investment opportunities than they would have if approaching the markets independently. Examples include hedge funds (which invest the assets of institutions and high-net-worth individuals to diversify risk and generate returns) and mutual funds (which invest the money of a number of investors in a diversified portfolio of assets). Funds may focus on specific types of investment (for example, renewable energy) and this allows investors to select funds that best represent their own investment goals and interests. The aim of every fund is to make a profitable return on investment.
Fund managers are financial investment experts who use their knowledge, skills and experience to invest money on behalf of their clients. With the guidance of the fund manager, an individual investor will choose a fund based on their investment objectives, risk appetite and fees involved. While each investor retains ownership and control of their assets, it is the role of a fund manager to make decisions about how a fund’s resources should be invested.
The fund manager is obligated to make investments that are compliant with the scheme rules and is paid to optimise returns in line with the level of risk of a particular fund. They are continually evaluated by financial planners and investors with regard to how well their funds perform and, while a market forces impact the performance of a fund, the manager's skills are a key factor. Successful fund managers can lead their fund to outperform market indexes and generate significant returns, and are in high demand.
