THE MANAGEMENT COMPANY
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management company of a mutual fund creates the mutual fund and manages
its operations. In most cases, the management company also acts as investment
As an investment advisor, a management company buys and sells the
fund's stocks, bonds, and other investments. It acts according to the policies
of the fund. The investments it chooses must fit the fund's objectives. For
example, if a fund is designed to achieve growth, the management company will
look for, study and buy investments that offer the right kind of growth
Another responsibility of the investment advisor is to ensure
that the fund is appropriately diversified. It may alter the percentages of each
holding, or of each security, according to trends in the market as a whole.
Compensation for the fund's managers comes out of the assets of
the fund through management fees, which are detailed in the fund's prospectus.
The prospectus also includes information about the management company and its
key decision makers.
Now, a short discussion of the people who sell you your