It's bringing in a ringer for your mutual fund. Like those spy movies, where they recruit the rogue hacker to break into North Korea's security system...or like a big-name guest star who comes on a TV show for a few episodes to create some buzz.
You run a fund company. You feel a particular fund needs a little help. So you go outside your employee base to bring in a third-party expert (likely a group with a particular specialty, like...how to navigate Silicon Valley) to run the fund. That person represents a mutual fund subadvisor.
And note that mutual funds comprise a few different levels or areas of focus: The people who raise the money, i.e. the fund brokers, put that money into one pot with a captive board of directors. That board then hires an advisor to the fund, i.e. the people who actually run the fund, making buy and sell decisions on its investments. The sub-advisor then comes after that broader portfolio manager set.
Many dials to be turned to make your 1%.
Related or Semi-related Video
Finance: What is Capital Appreciation (M...10411 Views
Finance a la shmoop what is capital appreciation as in the sense of an
investment fund or a mutual fund you know that is like what does it mean to
have a mutual fund with a focus on capital appreciation all right people
think more, more assets all right you have capital and yes you [Woman with a vault full of money]
appreciate having that capital but you'd appreciate it more if there was more of
it like it appreciated so a capital appreciation fund is one which focuses
on just growing the assets bigger and bigger don't really care how the capital
gets grown don't necessarily need dividends don't necessarily need minimum
p/e ratios don't necessarily need balance sheet covenants on the
investments you make don't care if it's exposed to the Venezuelan oil companies [Venezuela city landscape]
or the Australian dollar in a cap app fund well you just want the dough to [Money falls into flower pot]
grow and this ethos is in contrast to other flavors of funds which for example
need to throw off cash in the form of dividends like in a growth and income
fund or interest like in a bond fund like you know it's cash people need to
live on right so those have to do a capital appreciation does not so what's
a typical investment in a capital appreciation fund well usually be
something like a mega trend tech stock that just grows or appreciates with time [Man typing on laptop]
and really doesn't throw off much if any of a dividend like Amazon, Netflix
Facebook, Google those guys so think of a capital appreciation fund is the body [Man wearing underpants in a locker room]
builder of the mutual fund world it just wants to grow everywhere
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