Why Does a Fund Manager Buy or Sell a Stock?

An equity mutual fund collects money or investments from thousands of investors like you. Every equity mutual fund will have a fund manager. The fund manager, in order to achieve the investment objectives of the fund, take strategic calls of buying and selling stocks across sectors to maximise gains, based on the category the fund belongs to.

So if you have invested in a large cap fund, the fund manager will use the pooled money of investors like you, to invest in stocks of fundamentally strong large cap companies. Investing in equity funds is thus an easier way to invest in stocks as an expert handles the fund strategically. 

However, it is important to note that just because a fund manager decides to buy or sell a particular stock does not mean you need to imitate the same movement for your own stocks portfolio. Which stocks mutual funds bought or sold does not directly impact you.

The information presented above is just to keep you abreast with the happenings of the mutual fund industry so that you remain informed as an investor. A mutual fund manager buying a stock does not necessarily indicate it is a good stock. Similarly, mutual funds selling a stock or a particular category, mid-caps in this case, does not indicate the category is ‘bad’.

Fund managers are well equipped with technical knowledge of the markets and of the fund objectives. It is best to not copy their decisions. Always carry out your independent research when it comes to stocks and mutual funds and invest in alignment with your goals.