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Asset Management Key Concepts

Asset Management


Asset Management

Asset management entails the handling of resources in such a way as to achieve the optimum benefit from holding them. In the financial context, asset management—or investment management—is the business of investing clients’ resources with a view to delivering on their particular return objectives. Different investors have widely varying aims in terms of the return they are seeking, based of variables such as the level of risk they are prepared to accept, their timescale, and preferences based on geography and/or asset class. The latter term refers to the kind of assets they are happy to invest in; traditionally, many investors would look to equities, bonds, or property, but more recently alternative investment products, covering areas such as commodities and infrastructure, have become widely available. The term “mandate” describes the areas the asset manager is authorized by the client to invest his/her money in. Passive management aims to replicate the performance of an index, whereas active management involves discretionary decisions in an attempt to beat the returns from an index.

As well as offering unit-based investments to retail clients—which involves pooling money from a large number of investors into a fund which is then invested collectively—asset managers can also provide segregated investment services through which larger clients’ money is held separately from other investors’ funds. Segregated investment management decisions then made expressly for that client’s portfolio with a view to delivering on a client-specific investment objective.

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