A mutual fund advisor manages the assets in a mutual fund, and determines what those assets should be invested in. The advisor is responsible to the investors of the mutual fund and has a fiduciary duty to act with care in investing the money. Mutual funds are a form of investment that allows individuals to pool their money together to invest in stocks and bonds, and are sold on a stock exchange. Individual investors can buy into mutual funds and the money all goes into one big pool.
Some mutual funds are open to all investors, while others are limited to those who are invited or to investors who can invest over a certain minimum amount of money. Mutual funds are also focused on different goals and make different types of investments. For example, mutual funds can aim to provide investors with large dividends or to provide them with growth or stability.
Depending on the aim of a mutual fund and the amount of money invested in it, a mutual fund advisor makes determinations on how to invest the funds assets. The mutual fund advisor can invest in a group of stocks, bonds, or other investments. He can allocate all the money that people invest in the fund into the purchase of different fund assets.
A mutual fund advisor usually buys stocks or bonds within a specific category, depending on the goal of the mutual fund. For example, growth stock mutual funds are often emerging market funds or small cap funds. In an emerging market fund, the mutual fund advisor buys stocks in countries that are growing, while in a small cap fund, the fund advisor buys stocks in smaller companies that have great potential for growth. Other mutual fund categories include blue chip funds and midcap funds. Bluechip funds are those funds that buy stock in large, established companies; midcap funds buy stocks in midsize funds.
Mutual funds are rated by investment advisors according to the return the fund gives back to investors. The fund's return is publicized clearly and customers can search funds based on rate of return over a one-year, five-year, or ten-year period, or over the life of the fund. A mutual fund advisor will generally need to achieve a good rate of return in order to keep his job as the fund manager or advisor and to continue to have clients invest in his fund.