Our look at the categories of registration resumes this week with a look at portfolio managers. A portfolio manager is a firm or individual member of a firm that manages an investor’s portfolio on their behalf. This includes choosing what investments to buy, sell and hold for the investor. To do so they must be given discretionary authority from the investor.
This discretion is given through the signing of an investment management agreement This is a legal document signed and agreed upon between an investor and a portfolio manager. It outlines how the investors’ money is to be managed. It does not go into specifics on what securities or products to invest in, but instead outlines the investment philosophy, guidelines and constraints for the manager to follow when choosing investments. Upon the signing of the document by both sides, the manager can now buy and sell investments on the investors behalf as long as they adhere to what was agreed upon in the agreement.
The strategy of a portfolio manager is to actively manage a portfolio of investments in an effort to beat the market.