What is the role of the fund manager in an actively managed fund?

The role of the fund manager in an actively managed fund is fundamentally centered around making investment decisions based on market analysis. This involves a proactive approach where the fund manager seeks to identify and capitalize on market opportunities through extensive research and analysis. They utilize various tools and methodologies to forecast market trends, evaluate securities, and adjust the portfolio according to changing market conditions.

In an actively managed fund, the aim is to outperform a benchmark index by selecting individual securities that the fund manager believes will deliver superior returns. This contrasts with a passive management strategy, which would typically involve mirroring an index without making such targeted decisions. Therefore, the fund manager’s expertise, judgment, and ability to adapt to market dynamics play a crucial role in the performance of the fund.

The other options focus on passive strategies or more limited roles that do not align with the active management philosophy. Following a strict index minimizes changes, which is contrary to active management. Monitoring portfolio performance is indeed part of the fund manager's responsibilities, but it is not the core function, as the key lie in making informed investment decisions. Avoiding high-risk stocks may be a personal investment philosophy for some managers, but it is not a defining characteristic of the role in an actively managed context, where risk is evaluated and