Asset Management Explained | What Is Asset Management? | Careers In Asset Management
Today we
are going to discover the realm of asset management,
what it is
and,
what career
advancements it has to offer,
if you have
a strong interest in the financial market,
and want to
learn more about it then we urge you to read till the end of this post,
1 - What is Asset Management?
2 - How Asset Management Works?
3 - Career In Asset Management
1 -
What Is Asset Management
Asset
management is about managing clients investments & providing them with the
strategies & expertise,
that would
allow them to achieve their goals,
and secure
their financial future.
Simply put
asset management within the world of banking and finance,
is all about
managing and investing large sums of money on behalf of their client,
in order to
get a positive return over the long period of time.
in other
words asset management is a financial industry that uses money to make more
money,
clients
that contact these asset management firms have large income that if left alone
will depreciate in value,
and to
refrain that from happening asset management businesses provide these clients
with expertise across a wide range of asset classes, depending on their
investment portfolio.
This investment
portfolio is nothing more than the information and what the customer expects in
the long term,
how much
risk he is willing to take and so on,
Let's look
at the client classes of these asset management firms,
the asset management
clientele is segregated into two parts,
the first
one is individual client and second one
is financial institution,
individual
clients are people with huge amount of money,
whereas institutional
clients are insurance companies government entities charities or even corporate
pension funds,
asset
management companies offer expertise across a wide spectrum of asset classes,
such as
stocks bonds commodities real estate private equity etc,
moreover
these large corporations have branches all over the world and are able to offer
geographical expertise as well.
since these
companies closely follow the financial market they can offer high quality
advice and superior risk return investments,
initially
these firms study client needs create an actionable investment portfolio
implement the investment strategy in practice and oversee its development
through the time.
the
portfolios focus on all segments of the financial market,
the
research about the small cap and large cap stocks,
blue chip
and dividend stocks.
stocks from
growth regions such as brick countries.
there is
more to this list of stocks,
however all
of it depends on the risk profile of,
the client
the next investment sector bonds also have different instances such as shore maturity
and long maturity bonds,
corporate
and government bonds in addition to that we have commodities real estate and
some other alternative investment sectors such as hedge funds or private equity.
2 -
How Asset Management Works
We'll
discover asset management's functioning with the help and pension fund example,
now you
must be wonderin what a pension fund is well consider pension fund as a large
pot in which employees or private companies put some amount of their salary to
secure their financial future.
This
superannuation fund or port provides for the expenses of employees once they
retire.
let's say
apple INC has this scheme up pension fund,
and since
it has huge employee base,
the amount
of money going into this pension fund on a monthly basis will be hug,
and since
we are dealing with a enormous amount of money there is a possibility that
things like
political imbalance
in a country,
currency fluctuation
change in
countries economic policies or
inflation
can impact this fund and decrease the value of money in it over a period of
time.
that is why
these funds needs to be invested into the financial markets to refrain from
loss of economy,
and to grow
this money even further,
so that the
employees can rely on this scheme,
in addition
to this pension fund example the clients of asset management firms include
insurance companies,
who also have
a lot of money.
let's say
you have bought yourself bike insurance and you pay a premium on a yearly basis
for the same,
however you
don't actually utilize the insurance claim throughout the year,
you only
take insurance to mitigate risk if any accident happens in the future.
so consider
thousands of people doing the same thing as you,
the
premiums these insurance companies going to receive is going to be quite substantial
right,
so these
companies will have to invest this capital to generate more money and mitigate
any significant future risk events or catastrophes if they show up,
another
large institutional customer of these asset management firms are sovereign
wealth funds and non-profit charitable organizations.
Sovereign wealth
funds are basically large pools of money owned by governments.
Charities can
also have large pools of money,
lying around
because they don't know what to do with it at the present moment,
or they might
be thinking that it's not the best time to invest it into charity because because
of some reasons,
and hence
that huge money might be sitting idle,
so rather
than keeping it idle they invest it into financial markets with the help of an
asset management firms.
…..
3 – Career In Asset Management
Having said
that let's discover the job opportunities you can get in this asset management
industry,
there is a
wide range of job roles within an asset management organization,
however
there are three main profiles around which the whole asset management revolves.
1 – Sales
2 – Research Team
3 – Portfolio management
1 – Sales
The sales
post is responsible for establishing clients relationships and understanding clients
needs,
these are the
people who will actually bring clients to the firm and will also create investment
profiles.
2 – Research Team
The research
team comprise a professional research analyst help investment team locate best
financial plans available in the market,
which have
a tendency to grow over a period of time,
3 – Portfolio management
The portfolio
managers are the people who are ultimately responsible for making investment
decisions,
also these
people create and manage client portfolios according to their needs mentioned
by sales team,
they also
make sure that the assets are on the path of growth,
according
to glassdoor the average annual salary for an asset management professional
ranges between dollars 7000 to 132 000 in u.s,
whereas it
lies in between 7.2 lpa to 35 lpa in india.
the top
asset management companies across the world are,
Blackrock,
Vanguard
group,
Fidelity,
Investments
State state
global advisors,
Capital
group,
IP Morgan Chase,
and
Goldman
sach all of these companies hold assets worth almost 1 trillion dollars.
the world's
biggest asset management firm blackrock holds 84 lakh 55 000 million dollars
worth of assets.
talking
about work-life balance asset management has more flexible hours than most
investment banking and consulting job roles,
people do work hard but 16 hours of work shift very very rare.
