A money manager who works outside of the fund, and is hired by a fund manager to help with an investment portfolio. These subadvisors are allowed to manage all or some of a fund's assets, and usually are given a set of investment objectives to adhere to when selecting securities.

Watch: Mutual Funds

Mutual fund subadvisors usually head teams of smaller, more specialized investment firms. They are hired because of their expertise using specific securities in various industries. For fund managers, the benefit of using subadvisors is that they allow funds to tap talent that is not available in-house.

Investors should be aware of the fees the fund must pay to subadvisors. These fees could be charged to shareholders over and above any fees that already exist. These fees may take away value from a shareholder's investment.