Many Fund managers, whether they manage a mutual Fund, a trust Fund, pension and hedge funds, can sometimes have access to resources that the average investor does not. But the type and quality of information generally remains the same for all investors.
The information that managers use comes from publicly available information in the form of press releases, annual reports and filings with relevant stock exchanges. Fund managers will likely have a team of financial analysts using the latest software to analyze specific firms, markets and economic variables, who will make recommendations and forecasts on future prices and market trends.
Although these Fund managers have access to all these resources, the conclusions they come to about any particular security or market are potentially no better than what the retail investor can do with the TV remote in one hand and a mouse in the other. The only difference between the Fund Manager and individual investor is that the Fund Manager has a highly qualified and must adhere to a set of ethical standards.
Fund managers and most analysts go through a formal learning process that, most likely, a chartered financial analyst issued by the CFA Institute. The CFA program involves three rigorous levels of standardized testing, but in order to do this, you must have at least a recognized University degree.
Also, to maintain the CFA designation, the holder must comply with the Institute Code of ethics and standards of professional conduct, otherwise you risk to be suspended or expelled from the CFA society. In addition to education and experience, Fund managers will have a deep understanding of macroeconomics, international trade and behavioral Finance. Although it is not necessary to conduct a CFA to be a Fund Manager, it is encouraged.
Although the experience of the Fund Manager, and education can provide him or her with an edge, the actions of the Fund Manager may not be as transparent as they should be. The Manager may make investments that are contrary to the interests of the investors of the Fund. For example, the head of the Pension Fund may use the Fund to purchase securities (this kind of strategy is illegal is most cases), but the investor will not know what the Fund Manager does it. In this case, the probability of losses greater than if the Manager had not used the situation. (See. also: understanding dishonest broker tactics).
Although Fund managers are highly skilled, they should still use the same publicly available information that all investors use, and the conclusions they come to are potentially no better than those that were achieved by any conscientious investor.