Are Mutual Funds Managed by Real People or Computers?

You're scrolling through mutual fund options on a Sunday evening in Dubai. The returns look great. The fund name sounds professional.

But a thought crosses your mind: who's actually managing this money?

Is a real person studying balance sheets and picking stocks?

Or is a computer running some algorithm while everyone's asleep?

It's a fair question. At Belong, NRIs in our WhatsApp community ask this often, especially with all the buzz around AI in investing.

The short answer: most Indian mutual funds are still managed by real people. But the longer answer is more interesting, and understanding it will help you pick better funds.

Most Indian Mutual Funds Have a Named Fund Manager

Every mutual fund scheme registered with SEBI must have a designated fund manager.

This person is legally responsible for the investment decisions made within the fund. Their name, qualifications, and experience are disclosed in the Scheme Information Document (SID) and on AMFI's website.

At large fund houses like HDFC AMC, ICICI Prudential, or SBI Mutual Fund, a single fund manager often oversees multiple schemes.

Behind them sits a research team of 15 to 50 analysts. The fund manager makes the final call on what to buy, sell, and how much to allocate.

This is what the industry calls "actively managed" funds. The fund manager uses their judgement, research, and experience to select securities.

They study company financials, meet management teams, attend AGMs, and build financial models.

👉 Tip: You can check who manages your mutual fund on any AMC website or through Belong's mutual fund tools.

If the manager changed recently, the past performance data may not be relevant anymore.

What About Index Funds? No Human Picks Stocks There

Index funds are different. They don't involve active stock picking at all.

The fund simply replicates a benchmark, like Nifty 50 or Sensex, by buying the same stocks in the same proportions.

A computer algorithm handles most of the execution. The fund manager's role is limited to ensuring the tracking error stays low.

Tracking error measures how closely the fund follows its benchmark. A good index fund keeps this below 0.5%.

In India, passively managed assets (index funds and ETFs combined) have grown rapidly. According to AMFI data, passive fund AUM in India crossed ₹10 lakh crore by late 2024.

But actively managed funds still dominate, accounting for over 70% of total equity mutual fund assets.

For NRIs, the active vs passive choice depends on the market segment. Large-cap space? Index funds work well because most active managers struggle to beat the Nifty 50 consistently.

Mid-cap and small-cap space? Active managers in India still add meaningful value.

The Rise of Quant Funds in India

Here's where it gets interesting. "Quant" funds use computer-driven models and data analytics to make investment decisions.

They sit somewhere between fully human-managed and fully automated.

Quant Mutual Fund (the AMC, previously Escorts Mutual Fund) is the most visible example in India.

Their AUM grew from ₹130 crore in March 2020 to over ₹1 lakh crore by September 2024, according to Business Today.

Their approach uses a framework called VLRT (Valuation, Liquidity, Risk appetite, Timing) that blends data analysis with active management.

But "quant" doesn't mean "fully automated." Even at Quant AMC, human fund managers like Sanjeev Sharma make the final calls.

The computer screens thousands of stocks and identifies patterns. The human decides what to act on.

Other Indian AMCs using quantitative models include DSP Mutual Fund (DSP Quant Fund), Nippon India (Nippon India Quant Fund), and Tata Mutual Fund.

These funds use rule-based systems to filter stocks based on factors like momentum, value, and quality.

👉 Tip: A fund with "quant" in its name doesn't mean a robot runs it. Read the SID to understand the actual process. Most quant funds in India still have a named fund manager with significant discretion.

Can AI Actually Pick Better Stocks Than Humans?

A Stanford GSB study published in 2025 tested whether an AI "analyst" could improve on human fund manager portfolios.

The result: the AI outperformed 93% of human fund managers over a 30-year backtesting period. The researchers were so surprised they spent 12 months checking for errors.

Separately, a study published in Finance Research Letters (Chen & Ren, 2022) compared 15 AI-powered funds against 611 human-managed funds. The findings were nuanced.

AI-powered funds didn't beat the market by themselves. But they outperformed human peers by 5.8% annually, mainly because of lower turnover (31% vs 72%), lower transaction costs, and fewer behavioural biases.

The takeaway? AI is good at processing massive amounts of data without emotional interference.

Humans are better at contextual judgment, like reading between the lines of a CEO's body language during an earnings call.

A 2025 study from Future Business Journal found that AI-driven funds performed better in falling markets (less panic selling) while human managers captured more upside during recoveries (better at sensing market sentiment).

For NRIs choosing which mutual funds to invest in, this means the best approach may be a combination.

Most leading global fund houses are already moving toward "augmented intelligence," where AI handles data crunching and humans make the final decisions.

What Exactly Does a Fund Manager Do All Day?

If a computer doesn't pick the stocks, what does the fund manager actually do? Here's a typical day for an Indian equity fund manager at a large AMC.

Morning (7:30 AM to 9:15 AM): Review overnight global market moves. Check US market close, Asian market opens, commodity prices, and currency movements. Go through the daily research briefs prepared by the team.

Market hours (9:15 AM to 3:30 PM): Monitor portfolio performance. Take calls from company management teams. Review analyst recommendations. Approve buy or sell orders for the trading desk.

Post-market (3:30 PM to 6:00 PM): Attend internal investment committee meetings. Discuss sector outlook with other fund managers. Review upcoming quarterly results and adjust positions.

Ongoing: Meet company CFOs and CEOs (in person or virtually). Visit factory floors and retail outlets. Read annual reports, analyst research, and regulatory filings. Attend SEBI-mandated AGMs.

The fund manager's value lies in connecting dots that data alone can't reveal. A company's numbers might look perfect, but if the promoter is under regulatory scrutiny, that's context only a human can weigh.

The 2020 Franklin Templeton debt fund crisis, where six schemes were suddenly shut, is a reminder that pure data-driven credit analysis can miss governance risks.

Active vs Passive vs Quant: A Quick Comparison

What About Debt Funds? Are They Human or Computer Managed?

Debt fund management is almost entirely human-driven in India.

The fund manager makes calls on duration (long vs short-term bonds), credit quality (AAA vs AA rated issuers), and yield curve positioning.

Unlike equity, where quantitative models can crunch thousands of stock variables, bond markets in India are less liquid and less transparent.

Many corporate bond trades happen over the counter, not on exchanges. This makes human relationships and institutional knowledge critical.

After the Franklin Templeton episode, SEBI tightened rules around debt fund liquidity and credit exposure.

Fund managers now face stricter limits on how much they can invest in lower-rated bonds. But the actual decision-making remains with people.

For NRIs, debt fund taxation is no longer as attractive since 2023 changes removed indexation benefits. GIFT City fixed deposits and GIFT City mutual funds offer a tax-free alternative under Section 10(4D) of the Income Tax Act that's worth exploring.

Does the Fund Manager's Track Record Even Matter?

Yes, but with caveats. Research shows that past performance is a poor predictor of future returns.

According to data from S\&P SPIVA India, only about 25% of top-quartile fund managers stay in the top quartile over the next 3-year period.

What matters more is the process.

A fund manager who follows a disciplined, repeatable investment framework tends to deliver more consistent results than one chasing the flavour of the season. Look for these signals when evaluating fund managers.

Tenure matters. A manager who has been running the same fund for 7+ years through bull and bear markets has a meaningful track record. If the star manager left six months ago, the fund's history is less useful.

Style consistency matters. Does the manager stick to their stated approach? A value fund that suddenly chases momentum stocks is a red flag.

Rolling returnsmatter more than point-to-point returns. They show how consistently the fund has performed across different market cycles, not just from one date to another.

👉 Tip: Use Belong's fund comparison tools to check consistency rather than chasing the highest recent return.

The NRI Angle: Why This Question Matters More for You

As an NRI in the UAE, you're investing cross-border. That adds layers of complexity around taxation, FEMA compliance, and repatriation.

Here's why the human vs computer question is specifically relevant for NRIs.

KYC restrictions. NRIs from certain countries (US, Canada) face restrictions on which AMCs accept their investments. A human fund manager at an AMC that doesn't accept US NRIs won't help you, no matter how skilled they are. Check which platforms accept NRI investments before evaluating managers.

Tax implicationsdiffer. Active funds with high turnover generate more frequent capital gains events, which can trigger higher TDS for NRIs. A passive or quant fund with lower turnover may be more tax-efficient.

GIFT City options. GIFT City funds operate under IFSCA regulation, not SEBI. They're managed by real fund managers at licensed fund houses. But their tax-free structure under Section 10(4D) gives UAE NRIs a significant advantage. Explore options through Belong's GIFT City tools.

Will AI Replace Fund Managers Entirely?

Not anytime soon, especially in India. Here's why.

Indian markets have structural characteristics that make pure AI management harder. Corporate governance standards are still evolving. Related-party transactions, promoter pledging, and accounting quality vary widely.

These require human judgment that AI isn't good at yet.

Regulatory meetings and company management access give human managers an edge. SEBI's stewardship code expects fund managers to actively engage with the companies they invest in.

A computer can't attend a board meeting.

That said, AI is already changing how fund managers work. Most large Indian AMCs now use machine learning for preliminary stock screening, sentiment analysis of news and earnings calls, and risk monitoring.

The trend is toward AI as a tool that makes human managers more effective, not AI as a replacement.

Monitor GIFT Nifty to track how market movements affect your portfolio, whether it's managed by humans or algorithms.

The Bottom Line

Your mutual fund money is almost certainly managed by a real person, supported by technology. The best fund managers today use data and AI as tools, not replacements. For NRIs, the bigger question isn't human vs computer. It's whether the fund's process, cost structure, and tax treatment align with your cross-border financial goals.

Many NRIs in our WhatsApp community found clarity on this exact question before investing through Belong. Download the app, explore mutual fund options and GIFT City FD rates, and join thousands of NRIs making informed investment decisions.

Disclaimer: Mutual fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not indicative of future results. This article is for educational purposes only. Consult a qualified financial advisor before making investment decisions.