In the early period of development of finance as a profession, i.e., until the early 1950s, investment management was primarily concerned with the procurement of funds. The subject matter was mainly confined to financial problems arising during episodic events like incorporation, merger, consolidation and reorganization. Thus, the traditional role of the investment manager was to raise externally the funds required by joint stock companies. The internal administration of finance was either ignored or dealt with by the promoter entrepreneur himself.

With the passage of time, the role of investment manager has undergone drastic changes. Presently, the investment manager is in charge of determining the total amount of capital required for both the short-term (working capital) and long-term (fixed capital). This is done by proper forecasting and planning of finance. Secondly, their job profile includes investing the funds in assets and projects, with the aim of making profits. This is to be done in such a way that the earnings are more than the cost so that there is a positive net return to the concern.

Now the investment manager is concerned with the management of assets, raising and allocation of capital, and valuation of the firm. Besides, he has to ensure the supply of funds to all parts of the organization, evaluate the financial performance, negotiate with bankers, financial institutions and other suppliers of credit, and keep track of stock exchange quotations and the behavior of stock price.

To play his role well the investment manager has different tools, such as cost of capital, leverage, capital budgeting, working capital management techniques and fund flow analysis/cash flow analysis. Cost of capital helps in deciding the appropriate source of finance. Normally the sources with minimum costs are selected, so that the weighted average cost of capital can be kept to a minimum. Capital budgeting helps in deciding the proper investment mix; the available resources should be used in the most profitable way. For this purpose, suitable projects should be selected from alternative courses by using capital budgeting techniques.