Interest Alignment: When Fund Managers
Invest in the Fund They Manage

Manager-Invested Investment Funds

‘Skin in the Game’: Increased Investor Confidence When Fund Managers Are Invested in the Fund That They Manage.

Manager-Invested Investment Funds

When fund managers invest in the investment fund they are managing, the managers’ interest is largely aligned with interest of investors. 

This is all the more the case the more heavily a fund manager is invested in the fund he or she manages.

If 30 % or even 50% of the funds managed are funds invested by the fund managers themselves, investors can be sure that the managers themselves want to make a profit and do not want to lose their investments.

There are funds in which the fund managers are heavily invested and which have achieved profits over the years that are significantly above the respective market average.

Often, those funds are not advertised publicly and investors can invest by invitation only.

Volatility-Optimized Funds

Volatility-optimized funds, also referred to as volatility optimizer funds, are funds that follow a specific, defined basket (portfolio) of securities like listed company shares (often a choice of S&P 500 or DAX titles), ETFs, options, or futures, or the prices of commodities.

The fund managers of volatility-optimized funds develop strategies to counteract the volatility in the market. The strategies are adjusted to changing market conditions. If necessary, securities on which the fund strategy is based are also reassessed and, if necessary, dropped.

Nowadays, like managers of other funds as well, fund managers of volatility-optimized funds often employ 

The goal is to realize gains above the gains of the securities in the defined basket.

An Example: A Volatility-Optimized, Manager-Invested Investment Fund

To demonstrate how a well-managed, volatility-optimized fund may realize gains well above the securities in its portfolio, we provide you below with the monthly and annual loss and profit figures of a real volatility-optimized fund.

This volatility-optimized fund is operating since more than 7 years. It traces about 40 selected S&P 500 securities. The volatility of this basket is optimized by its fund managers with substantial support of AI. The strategy follows the uptrends of the selected S&P 5oo securities, but cushions the downtrends.

The result of more than 7 years operation is an annual average gain of more than 23%, while the S&P 500 itself gained less than 13% annually during the same period.

This volatility-optimized fund is actually the best in its class.

The top management who launched the fund is invested in this fund with with several 10 per cents of the total funds under management.

The figures in detail:


What you could expect from Shanda Consult

If you are a professional investor or fund manager and would like to get in touch with top fund managers of heavily manager-invested funds and/or volatility-optimized funds, we will be happy to introduce you.



The information and materials in this article are for general information, illustration and discussion purposes only and do not constitute financial advice and/or an offering. All information provided and statements made above are to the best knowledge of the management of Shanda Consult.

The information and/or statements above are not to be misinterpreted as forward-looking statements. Although the information and statements provided have been provided to the best knowledge of the management of Shanda Consult, non of them shall be read a statements of historical facts.

Past performance is no guarantee to future results.