What does an ETF fund manager do

Many factors determine the typical daily activities and job responsibilities of an ETF portfolio manager. These factors include the basic type of fund under management, whether it is an actively managed ETF or an ETF engaged in passive index investment, and how many support staff the fund manager must have to assist in evaluating investments and handling 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 involving the client/client relationship.

Investment management

The main job responsibility of an ETF portfolio manager is to handle the investment portfolio. The portfolio manager is ultimately responsible for making the decision to include the investment in the fund’s portfolio. ETF managers engage in continuous research and stock or other asset evaluations, track market activities and trends, and monitor economic news and conditions that may affect the profitability of the portfolio. Risk assessment is an essential element of portfolio management, especially when considering major changes to portfolio holdings.

Compared with index-based ETFs, actively managed ETFs have a much larger task in making investment choices. Passive index funds usually only make major changes to their portfolios when the index is rebalanced on a regular basis. However, even managing index funds requires regular investment evaluations. Index funds usually invest a portion of their assets into investments that are not included in the underlying index. Portfolio managers make these supplementary investment choices. The index ETF manager will regularly evaluate whether the relevant index is the best choice to achieve the fund’s investment goals.

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When making investment decisions, portfolio managers usually get the assistance of a team of researchers, market analysts, and traders. Convene a team meeting where analysts or researchers assigned to a specific part of the portfolio will report and provide opinions on the current or proposed portfolio holdings. Portfolio managers may also regularly contact other analysts outside the fund team to obtain information about potential investments. In order to accurately evaluate stock investments, ETF managers not only rely on analyzing financial statements, but also usually meet with company executives to make smart decisions about investing in company stocks.

customer relations

Almost all the largest investors in ETFs are institutional investors, such as banks or pension funds. Since they account for a large proportion of the total assets (AUM) managed by the ETF, and also account for a large proportion of the expenses incurred by the ETF, it is important to attract and maintain 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 obtaining the investment, the portfolio manager will continue to meet regularly with investors to ensure that they continue to invest in the fund and may obtain additional investment capital.

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In addition to working with institutional clients, there is also the daily work of dealing with customer service issues for any investors in the fund. This kind of work is usually handled by customer service staff rather than directly by the portfolio manager. However, fund managers still need to solve general customer service issues, such as regularly writing fund reports, notifying customers of new services provided to investors or upgrading the company’s trading platform.

Customer service is one of the areas where job responsibilities vary between individual portfolio managers and asset management companies. For example, a superstar portfolio manager at BlackRock (NYSE: BLK) may not personally handle the same level of marketing and customer service work as a relatively unknown fund manager at a smaller company. Larger asset management companies have more auxiliary and support staff to handle sales and marketing tasks and customer service inquiries.

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ETF managers and mutual fund managers

The jobs of ETF portfolio managers and mutual fund portfolio managers are basically interchangeable, except for one of the main differences between ETFs and mutual funds. ETF stocks are freely traded 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 issuer, trading at the closing price only once a day.

The ETF portfolio manager does not need to deal with the actual trading of stocks. However, when shareholders wish to sell stocks, mutual fund managers must directly deal with stock redemptions. Large stock redemptions usually require liquidation of part of the fund’s holdings to process the redemption, and the fund manager must decide which holdings to sell.


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