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FP Article 15.11 (To sign up for a FREE 16-lesson eCourse on Investment Risk, please click here.)

Investment Risk - Manager's Risk

by Rajen Devadason

Experience does not err; only your judgments err by expecting from her what is not in her power.

Leonardo Da Vinci

  In this day and age, most of us benefit greatly from the expertise of money managers. However, that gain comes with two distinct costs:

First, no money manager worth his salt comes cheap. Second, even the best money manager makes mistakes. Manager's risk, therefore, is the risk assumed by an investor that her investment might underperform simply because of mistakes committed by the fund manager.

You should aim to reduce such risk.








The best way to do so is to restrict your hedge fund or mutual fund or unit trust fund exposure to investments that enjoy long proven track records under - and this is vitally important - the current fund manager.  

This is an article explaining manager's risk. I hope you enjoy reading it. But if it isn't what you're looking for, you're welcome to search for something that better meets your needs. Thank you for allowing me to serve you.

Rajen Devadason

Web www.FreeCoolArticles.com










That's because there is little point in selecting a fund that has a great history if the person currently at the helm is not the same one responsible for creating that history!

So, before you dive into any fresh investment, spend some time looking into the background of the people who manage it.

And, if after all that ferreting about you discover the previous manager has left his job of managing the fund, do yourself a favour and invest the additional time needed to find out whatever you can about the past performance of this ‘new kid on the block’.

Even though no fund manager can hope to be right all the time, you should still do all you can to minimise the risk of parking your hard earned cash with someone who is less than supremely able to take care of it and, hopefully, make it grow.

If you'd like to continue to learn more about other types of investment risk, here's additional information for you...

15 Types of Investment Risk (OR, to sign up for a FREE 16-lesson eCourse on Investment Risk, please click here.)

1. Borrowing Risk

2. Company Risk

3. Credit Risk

4. Currency Risk

5. Diversification Risk

6. Industry Risk

7. Inflation Risk

8. Interest Rate Risk

9. Liquidity Risk

10. Lost Opportunity Risk

11. Manager's Risk

12. Market Risk

13. Market Timing Risk

14. Political Risk

15. Prepayment Risk



© Rajen Devadason

Web www.FreeCoolArticles.com






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Rajen Devadason, CEO RD WealthCreation Sdn Bhd & RD Book Projects
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