Weekly Lessons

Fund Managers

March 3, 2020

“Fund managers have billions to their disposal and can move the market anywhere they want. Fund managers are great traders.”

This is how newbies, retail traders, and those who don’t know how fund managers work think most of the time. They are outside looking in.

Truth is:
1) Funds and fund managers operate according to a prospectus.
2) The trading style of the fund is defined.
3) Position sizes are defined (and usually limited).
4) Positions are (usually) accumulated over time.
5) Positions are (usually) liquidated over time.
6) Expected (vs actual) client buy-ins and withdraws are always factored.
7)Most of the time they are employees doing what they are instructed to do/mandated to do.

Retail has a significant edge versus funds/fund managers in that they have nimbleness, in all aspects of operations.

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