We often say that the fund manager is the soul of the fund, or that choosing a fund means choosing a fund manager. Why does the fund manager play such an important role in the operation of a fund?

The Importance of Fund Managers to Fund Performance

The importance of fund managers can be divided into index funds and active funds. Although index funds also have fund managers, since they are index funds, they can only passively track specific indexes. In other words, the stocks bought by index funds are mainly constituent stocks that track the index, and fund managers basically have no right to decide which stocks to buy, so index funds are called passive funds. Therefore, the dependence of index funds on fund managers is relatively low.

Active funds are completely different. Basically, it is entirely up to the fund manager to decide what stocks to buy, including positions, and when to sell them. Of course, freedom is relative, and we still have to abide by the relevant fund laws and regulations, and be bound by the fund theme strategy and the relevant regulations of the fund company. But generally speaking, for active funds, the authority of the fund manager is great, and the performance of the fund depends largely on the ability and experience of the fund manager.

Of course, for an excellent active fund, besides the excellent fund manager, the strength of the fund company, the investment theme or strategy of the fund and other factors can not be ignored. However, the importance of fund managers to active funds cannot be overemphasized.

It is very difficult to find a Public Offering of Fund manager with strong ability, excellent performance and stability, which is also the most difficult place for active funds to invest.

The Importance of Fund Managers to Fund Companies

Fund managers are very important not only for active funds, but also for fund companies.

As we know, fund companies are one of the most important institutions in the asset management industry. The core index of the asset management industry is the asset management scale, because only when the asset management scale goes up can we receive enough management fees to maintain the company's operation. As an asset management institution, fund companies mainly rely on management fees. Of course, some special account management businesses still have certain performance commission income, but the proportion is relatively small. The management fee is equal to the management scale multiplied by the rate, which is basically fixed and has a downward trend with the intensification of competition.

The management fees of active funds are generally higher. For example, the management fees of stock funds and hybrid funds are basically between 1- 1.5%, which is more than three times that of bond funds and monetary funds. Therefore, from the perspective of income, partial stock active funds such as stock funds and hybrid funds are very important to fund companies.

The scale of partial stock funds mainly depends on performance, and the scale with good performance will grow faster. Since fund managers are so important to funds and fund companies, if we intend to invest in active funds, we should pay long-term attention to the research on fund managers.