Home News What ETF Fund Managers Do

What ETF Fund Managers Do

by SuperiorInvest

Several factors go into determining the typical daily activities and job responsibilities of an ETF portfolio manager. These factors include things like the basic type of fund being managed, whether it is an actively managed ETF or one that engages in passive index investing, and the size of the support staff the fund manager has to help. evaluate investments and manage customer service. tasks.

The activities of ETF portfolio managers fall into one of two categories: activities related to making investment decisions for the fund and activities involved in client/client relationships.

Investment Management

The primary job responsibility of an ETF portfolio manager is to manage portfolio investments. The portfolio manager is ultimately responsible for making decisions about which investments to include in the fund’s portfolio. An ETF manager engages in ongoing research and evaluation of stocks or other assets, tracks market activity and trends, and monitors news and economic conditions that may affect portfolio returns. Risk assessment is an essential element of portfolio management, especially when substantial changes to portfolio holdings are being considered.

The task of making investment decisions is considerably greater with an actively managed ETF than with one that tracks an index. Passive index funds typically make substantial portfolio changes only when the index is periodically rebalanced. However, even index fund management requires periodic evaluation of investments. It is common for index funds to commit a portion of their assets to investments that are not contained in the underlying index. The portfolio manager makes those complementary investment decisions. An index ETF manager periodically evaluates whether the underlying index is the best choice for achieving the fund’s investment objectives.

A portfolio manager is usually assisted by a team of researchers, market analysts and traders when making investment decisions. Team meetings are held in which analysts or researchers assigned to cover specific parts of the portfolio prepare reports and offer opinions on existing or proposed portfolio holdings. The portfolio manager may also periodically contact other analysts, outside of the fund team, to obtain information on potential investments. To accurately evaluate stock investments, ETF managers do not simply rely on analysis of financial statements, but also often meet with corporate executives to make informed decisions about investing in a company’s stock.

Customer relations

The largest investors in virtually any ETF are institutional investors, such as banks or pension funds. Since they represent a large proportion of an ETF’s total assets under management (AUM) and, consequently, a large proportion of the fees the ETF generates, it is vitally important to attract and retain such investors. Therefore, an important responsibility of an ETF portfolio manager is to meet with potential institutional investors and persuade them to invest in the fund. After securing investments, the portfolio manager continues to meet regularly with investors to ensure their continued investment in the fund and possibly secure additional investment capital.

In addition to working with institutional clients, there is also the daily work of managing customer service issues for any fund investors. That type of work is typically done by customer service staff and not directly by a portfolio manager. However, a fund manager still has to address general customer service issues, such as writing regular reports on the fund and informing clients about new services offered to investors or updates to the company’s trading platform.

Client service is an area where job responsibilities differ depending on the individual portfolio manager and the asset management company. A superstar portfolio manager at BlackRock Inc. (NYSE: BLK), for example, can’t be expected to personally handle the same level of marketing and customer service work as a relatively unknown money manager at a smaller firm. Larger asset management companies have more ancillary and support staff to handle sales and marketing work and customer service inquiries.

ETF Managers vs. Mutual Fund Managers

The jobs of ETF portfolio managers and mutual fund portfolio managers are often essentially interchangeable, except when it comes to one of the main differences between ETFs and mutual funds. ETF shares trade freely on exchanges throughout the trading day, and are bought and sold by shareholders. In contrast, mutual fund shares are bought and sold directly from the fund’s issuer, and transactions only occur once a day, at the closing price.

An ETF portfolio manager does not have the burden of handling actual stock transactions. However, a mutual fund manager must manage share redemptions directly when shareholders wish to sell them. Large stock redemptions typically require liquidation of some of the fund’s holdings to handle the redemption, and the fund manager has to decide which holdings to sell.

Source Link

Related Posts