To achieve higher returns, a fund manager actively manages funds and tries to beat the benchmark index, whereas for an investor, a benchmark index gives an idea to evaluate his fund’s performance.
The active management of a fund basically means that a fund manager has taken an opportunity of buying and selling of securities to outperform their fund in a hedging condition. However, the active management of funds totally depends on the skill of the fund manager, his research, analysis and the knowledge of the overall financial market condition. Properly managing of funds also minimises the risk factor which is directly linked with market’s volatility. Therefore, one must know one’s fund manager who actually manages the fund of investors.
