Understanding the Role of a Fund Manager in Collective Investment Schemes (CISs) and their Impact on Investment performance
A fund manager plays a crucial role in managing unit trust funds, responsible for:
1. Investment strategy: Developing and implementing investment objectives, policies, and strategies.
2. Portfolio management: Selecting, buying, and selling securities within the fund.
3. Risk management: Monitoring and managing risk exposure to ensure alignment with investment objectives.
4. Research and analysis: Conducting market research, analysing economic trends, and identifying investment opportunities.
5. Performance monitoring: Tracking fund performance, adjusting strategies as needed.
6. Compliance: Ensuring adherence to regulatory requirements and fund guidelines.
7. Investor communication: Providing updates, reports, and insights to investors.
Impact of a Fund Manager on Investment Performance:
A skilled fund manager can positively impact investment performance through:
1. Expertise: In-depth knowledge of markets, sectors, and securities.
2. Research-driven decisions: Informed investment choices based on thorough analysis.
3. Risk management: Minimizing losses, maximizing gains.
4. Adaptability: Adjusting strategies to respond to market changes.
5. Cost control: Optimizing expenses, fees.
Conversely, a poorly performing fund manager can negatively impact investment performance due to:
1. Lack of expertise
2. Emotional or impulsive decisions
3. Inadequate risk management
4. Failure to adapt to market changes
5. High fees or expenses
Key Performance Indicators (KPIs) for Fund Managers:
1. Return on Investment (ROI)
2. Net Asset Value (NAV) growth
3. Turnover rate
Best Practices for Selecting a Fund Manager:
1. Evaluate track record and experience
2. Assess investment philosophy and strategy
3. Review fees and expenses
4. Check regulatory compliance
5. Monitor communication and transparency
6. Consider independent ratings and reviews
Fund managers play a vital role in managing unit trust funds in Uganda which have grown significantly since their introduction in 2008 to over 3 trillion in AUM as at June 2024. Key players include: Stanbic Bank Uganda and ICEA Asset Managers Uganda. it’s essential to research and evaluate fund managers’ performance, fees, and investment strategies to ensure alignment with your financial goals.
