Interpret funds acquistion alternatives avaialble to management and related risks

| July 24, 2015

Interpret funds acquistion alternatives avaialble to management and related risks:

Interpret funds acquistion alternatives avaialble to management and related risks:

 

You asked two questions to this subject-

 

1) How will accomplishing these objectives support your success in management?

 

2) What risks or challenges might a manager encounter if they have not mastered these objectives?

 

I’d like to start with to be a successful funds manager you have to think what is it that you would look for in a fund manager yourself?  Kiplinger magazine posted a article for 6 steps to a great funds manager, (although it appear to only list 5)

 

1) Resist the urge to trade all the time or to churn the holdings in your portfolio, when you find a great company, keeping it for a long period of time can be beneficial.

2) Be patient, your fund could increase in value, even double!

3) Learn to read the markets, by being able to read “the signs” such as economic, polictical, psychological and social signs of the market can be invaluable for the trader. anyone can read charts, but for some company’s, being able to see the big picture is even better.

4) Deal with your mistakes, having confidence is great but throw in some humility as well. when you made a big mistake, learn from it and move on.

5) Don’t be a slave to benchmarks or short term records, investigate decision making process at the fund. know how they determine what’s good from bad.

(http:// www.kiplinger.com/article/investing/ 6-steps-to-a-great-funds-manager.html)

 

So if this is the advice they give to find a great funds manager, shouldn’t this be the advice you follow to be a good funds manager?

 

Now to answer the second question, Motley Fool told a story that may interest some-

 

Peter Lynch was consider a superstar investor for Fidelity Magellan Fund(FMAGX) from the 1970’s – 1990. he helped earn this fund double the S&P 500’s return on a annual basis.

By the late 1990’s this fund was the single largest fund in existence.

Magellan is the perfect example of how reversal of fortune happens.

This fund is 1/5th. of the asset base it boasted during the turn of the century peak. Why is this? Their superstar picker had left the company for one reason, Peter Lynch was considered amazing at picking stocks. Current manager Harry Lange said poor picks in information technology and consumer discretionary sectors distracted from the results.

It was hard to fill Peter Lynch’s shoes and the fund was simply too large to manage.

 

Motley Fool  has this advice for investors:

 

a) A fund is only good as its manager- Look into the tenure and money handling track record of the manager, a quality investor should consider this.

b) Size does matter-  Manager’s of extra large funds are limited in the stocks they can buy, the bigger the fund, the more risk it runs into looking like the index.

c) Top ranked funds won’t always be on top- Even the best manager’s can’t stay on top forever, every manager or fund will encounter under performance.

(http://www.fool.com/investing/mutual-funds2010/11/30/the-fall-of-an-investing-superstar.aspx)

 

Why did I choose this story? to show how stepping into another’s shoe’s, isn’t always easy and how investor’s could view you the fund manager to be he blame when funds fail, when in fact it was the fund itself that was bound to fall.

 

To master the domain of finance is an ever challenging and a staying alert process. Funds change at the drop of a hat, so you must be diligent in your endeavors to know what is happening.

Another piece of interest that will be noted in the very near future:

 

The implementation of Topic 606, what is this? This is to create a common revenue standard to impose comparability of revenue recognition across entities,industries,jurisdictions and capital markets. this will include investing managers and general partners of investment funds.

What is it? It will perscribe the method of accounting for revenue from contracts with customers, this will begin  12/31/2018. It may impact the amount and timing of revenue reported in an entity’s income statement.

Why? This will create common revenue standards, It will improve revenue recognition across entities, industries,juridiction’s and capital markets. They will do this by following a 5 step process to determine when and what amount to recognise revenue from the transferof goods or services to customers.

(http:// www.caymenfundsmagazine.com/article/what-managers-need-to-know)

 

This is a lengthy article so I only gave the basic’s of information that must be read to answer the question.

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