What is a Portfolio Manager?

//What is a Portfolio Manager?
What is a Portfolio Manager? 2017-10-09T05:37:50+00:00

Definition: A portfolio manager is a financial professional who is responsible for the management of mutual funds and other investment vehicles, aiming to increase the growth of a portfolio through the implementation of the proper investment strategies.

What Does Portfolio Manager Mean?

What is the definition of portfolio manager? Usually, a portfolio manager is an experienced fund manager or broker with a wide industry knowledge and the skills to invest in closed-end funds, exchange-traded funds (ETFs) or mutual funds by implementing an appropriate investment strategy per case.

Furthermore, a portfolio manager may be actively managing a portfolio through day-to-day trading or passively through investing in fund indexes, which track the performance of the securities in the portfolio. Generally, the portfolio managers, who consistently take into account the historical performance of assets, are those who are more likely to outperform the market.

Let’s look at an example.

Example

Jerry is an experienced investment manager with a track record in fund investing, and he works at a prominent fund management firm. Jerry is an active portfolio manager who tracks the historical data of the investments he includes in his clients’ portfolios. He doesn’t believe that tracking an investment index can add significant value to a portfolio and he prefers to follow the market and implement the proper investment strategy in each case.

Portfolio Manager Example

Furthermore, Jerry in an aggressive portfolio manager. He likes to invest in stocks and diversify his clients’ portfolios by allocating risk over riskier investments. One of his current portfolios has a total value of $216.72 billion, out of which Jerry invests $48.37 billion in closed-end funds, $61.82 billion in ETFs, and $106.54 billion in stocks.

This is an aggressive portfolio given that it doesn’t invest at all in mutual funds and bonds. Furthermore, the stocks account for 41.13% of the total portfolio value. Only in the cases that Jerry has a risk-averse client, he would choose to switch stocks for bonds and significantly lower the percentage of stock holdings in the portfolio.

Summary Definition

Define Portfolio Manager: Investment portfolio manager means an investor or analyst who actively monitors your investments and makes adjustments to your portfolio in an effort to maximize returns.