Role of a Fund Manager in Mutual Funds
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This article is for general information/education and is not investment advice. The information is shared in good faith and for general informational purposes only. Ujjivan SFB does not make any representations or warranties regarding the accuracy, completeness, or reliability of the content.
Mutual Fund Distributor: Ujjivan Small Finance Bank Ltd
ARN: 175676
June 02, 2026
Mutual funds pool money from multiple investors and invest across financial instruments such as equities, bonds, and money market securities. Professional experts known as fund managers oversee and actively manage these investments.
Understanding the role of a fund manager may help investors understand how they manage mutual funds and make investment decisions.
Who is a Fund Manager?
A fund manager is a professional responsible for managing the investments of a mutual fund scheme. They handle the portfolio according to the scheme objective, investment strategy, and risk framework defined for the mutual fund.
What Does a Fund Manager Do?
Fund managers handle several responsibilities as part of managing a mutual fund portfolio.
1. Portfolio Selection
Fund managers select investments for the portfolio based on the objective of the mutual fund scheme.
Depending on the type of fund, this may include:
The investment selection process is aligned with the overall strategy of the fund.
2. Investment Allocation
Fund managers decide how investments are distributed across sectors, industries, companies, or asset classes.
This allocation process helps determine:
3. Risk Management
Managing portfolio risk is an important part of mutual fund management. Fund managers regularly review whether the portfolio remains aligned with the risk profile of the scheme.
This may involve:
4. Monitoring Market Conditions
Fund managers continuously track:
These factors may influence investment decisions and future portfolio positioning.
5. Portfolio Rebalancing
Market movements shift the allocation structure of a portfolio over time. Fund managers rebalance the portfolio through active buying or selling of assets to restore alignment with the intended investment strategy.
Rebalancing may happen due to:
6. Maintaining the Fund Objective
Every mutual fund scheme operates with a defined investment objective. Fund managers try to ensure that portfolio decisions remain aligned with this objective throughout the investment period.
7. Ensuring SEBI Compliance
In India, SEBI (Securities and Exchange Board of India) sets the rules and policies that govern all mutual fund schemes. Fund managers must ensure that every investment decision and operational activity within the fund stays fully compliant with SEBI regulations. Non-compliance may invite regulatory action and erode investor trust.
8. Active vs. Passive Fund Management
Fund managers operate under one of two broad strategies:
1. Active Management
The fund manager actively studies and analyses market trends, selects securities, and attempts to outperform the concerned benchmark index. Active fund managers anticipate future opportunities and stay ahead of market shifts. They work as the sole custodian of buying and selling of stocks.
2. Passive Fund Management
Unlike active fund management, in passive mutual funds, the fund manager has a limited role to play. Since there’s no involvement of active stock selection, the fund manager’s role stays limited to ensuring whether the fund is able to mirror the underlying index.
Role of Research Teams in Supporting Fund Managers
Fund managers often work closely with research analysts and investment teams while making portfolio decisions. Research teams may study:
These insights may help fund managers evaluate investment opportunities, assess risks, and review portfolio positioning more effectively.
The fund manager generally takes the final investment decisions, but research support plays an important role in the overall investment process.
How Fund Managers Handle Different Types of Mutual Funds
The role of a fund manager may vary depending on the type of mutual fund being managed.
1. Equity Mutual Funds
In equity funds, fund managers usually focus more on:
These funds are generally more influenced by market movements and equity valuations.
2. Debt Mutual Funds
In debt funds, fund managers may focus more on:
Portfolio stability and interest rate sensitivity become important considerations in debt fund management.
3. Hybrid Mutual Funds
Hybrid funds combine multiple asset classes such as equity and debt. Fund managers balance allocation across these asset classes based on the objective of the scheme.
This may involve adjusting portfolio exposure between growth-oriented and income-oriented investments.
Disclaimer: The above statements are for illustration/information purposes only. Please check your fund’s SID (Scheme Information Document) to understand the investment philosophy and other details.
How Changes in Fund Management May Affect Portfolio Strategy?
When fund management changes, the way a mutual fund operates may also change. This is because every fund manager brings their own way of managing funds.
One fund management approach may differ from another when it comes to:
Investors may monitor fund management changes while reviewing a mutual fund’s investment approach and overall portfolio management. However, portfolio performance may continue to depend on multiple factors beyond fund management changes alone.
Disclaimer: Past performance may not guarantee future results.
Final Thoughts
Fund managers play an important role in managing mutual fund portfolios through investment selection, allocation decisions, portfolio monitoring, and risk management. Their decisions help maintain alignment between the portfolio and the scheme’s investment objective.
At the same time, mutual fund performance is also influenced by broader market and economic conditions. Understanding the role of a fund manager may help investors understand how professionally managed mutual funds operate and how investment decisions are handled within a mutual fund structure.
Disclaimer:
The contents herein are only for informational purposes and generic in nature. The content does not amount to an offer, invitation or solicitation of any kind to buy or sell, and are not intended to create any legal rights or obligations. This information is subject to updation, completion, amendment and verification without notice. The contents herein are also subject to other product-specific terms and conditions, as well as any applicable third-party terms and conditions, for which Ujjivan Small Finance Bank assumes no responsibility or liability.
Nothing contained herein is intended to constitute financial, investment, legal, tax, or any other professional advice or opinion. Please obtain professional advice before making investment or any other decisions. Any investment decisions that may be made by the you shall be at your own sole discretion, independent analysis and evaluation of the risks involved. The use of any information set out in this document is entirely at the user’s own risk. Ujjivan Small Finance Bank Limited makes no representation or warranty, express or implied, as to the accuracy and completeness for any information herein. The Bank disclaims any and all liability for any loss or damage (direct, indirect, consequential, or otherwise) incurred by you due to use of or due to investment, product application decisions made by you on the basis of the contents herein. While the information is prepared in good faith from sources deemed reliable (including public sources), the Bank disclaims any liability with respect to accuracy of information or any error or omission or any loss or damage incurred by anyone in reliance on the contents herein, in any manner whatsoever.
To know more about Ujjivan Small Finance Bank Products Visit:"https://www.ujjivansfb.bank.in"
All intellectual property rights, including copyrights, trademarks, and other proprietary rights, pertaining to the content and materials displayed herein, belong
to Ujjivan Small Finance Bank Limited or its licensors. Unauthorised use or misuse of any intellectual property, or other content displayed herein is strictly prohibited and the same is not intended for distribution to, or use by, any person in any jurisdiction where such distribution or use would (by reason of that person’s nationality, residence or otherwise) be contrary to law or registration or would subject Ujjivan Small Finance Bank Limited or its affiliates to any licensing or registration requirements.
