![]() A common fee structure is the 2 and 20 it is where a 2% fixed fee of the assets under management are paid and 20% of profits are also paid as a commission. ![]() ![]() However, more commonly, money managers charge either a fixed fee and a variable fee. ![]() Other money managers charge a commission-based fee, i.e., 20% of profits. Some money managers only charge either a one-time fee or a periodic one. The former of the two is more common in retail banking, whereas, the latter is more common in large-scale money management like mutual funds or hedge funds.Ĭompensation for money managers can also vary. Money managers can either create a customized portfolio of investments for each client or maintain a set fund that clients can buy into. How Do Money Managers Operate?įor a fee, money managers provide money management services to clients. Some famous money managers include Warren Buffet, Charlie Munger, and Peter Lynch. Money managers are also present in the form of hedge funds, pension funds, private equity funds, or mutual funds almost all buy-side firms have a money management aspect. Money managers can be found in traditional financial institutions at all levels of banking, including retail. Clients pay money managers a fee for their services, and in turn, money managers have a fiduciary responsibility to choose investments with their client’s best interest in mind and without taking on unwarranted risks.Īdditionally, money managers may have access to areas of the capital markets that clients may not have, or they may have access to such areas at a cheaper premium. Money managers can adopt varying goals for their clients, including ensuring the safety of the principal, maximizing returns, or seeking value or growth investments. Money managers may also track expenses and investments, create budgets, and evaluate taxes. A money manager is a person or entity that manages the financial assets of a portfolio for individuals or institutional investors.
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