Combining the investment expertise of an investment adviser and sub-adviser can provide a dual layer of knowledge, expertise and oversight that can benefit a fund’s investors.
An investment adviser, or “fund manager,” is typically responsible for overseeing the fund’s daily operations and managing the fund’s assets while adhering to the fund’s investment objectives. The investment adviser may hire one or more sub-advisers to assist in the management of the fund and otherwise gain access to a particular area of expertise or augment and enhance its investment capabilities.
The investment adviser’s primary role is to:
- Determine a fund’s investment objective, strategy and policies
- Make all final investment decisions
- Evaluate, select and recommend sub-advisers
- Monitor and oversee the performance and investment activity of the fund and sub-adviser
- Advise and consult with the board of directors of the fund on matters relating to the fund
A sub-adviser is an asset management firm hired by an investment adviser to help identify, evaluate and manage investments within a portfolio. Sub-advisers are typically selected based on their investment style, expertise and track record in a specific investment strategy.