What is Asset Management?
Asset Management is the practice of growing your overall wealth by acquiring, maintaining, trading, and investing in assets that have the potential to increase in value.
Asset managers perform this service for others by managing their clients’ investments. They may also be known as portfolio managers or financial advisors. Some people work independently, while others work for an investment bank or other financial institution.
Goals of Assetmanagement
Asset management has two goals: increasing value and mitigating risk. Risk tolerance is the first question to ask when considering a new project. A retiree living off an investment portfolio or a pension fund administrator should be risk-averse. They should not take unnecessary risks. An adventurous person who wants to dabble in high-risk investments might be interested in investing in cryptocurrencies.
Most of us are someplace in the middle, and investment advisors try to figure out where that is for their clients.
An asset manager’s job is to determine which investments to make or not to make, to realize the client’s financial goals within limits set by the client’s risk tolerance level. Investments may include stocks, bonds (including Treasury bills), real estate, commodities, alternatives, and mutual funds, just to name a few.
The asset manager is supposed to use both macro and microanalytical tools to conduct rigorous research. This includes statistical analysis, reviews of corporate financial statements, and any other thing that could help achieve the stated goal of increasing client assets.
