Investment management – Professional managementof assets (securities or assets), also called portfolio, money management, orprivate banking, to reach a specific goal for the sake of the investor. Investorsmay be individual (private through contract) or institution (as pension fund). Theglobal asset management industry consists of 70,000 funds.
– In corporate finance is aprocess of making sure that all available resources (tangible & intangible)are used in the most efficient way, so they find ways to maximize the value ofthe company by evaluation of assets, using accounting methods, schedules for maintenance,& operation production management.services provided- Allocation of assets, selectionof stocks, analysis of financial statements, monitoring of investments thatalready exist, & executing plans.fund/investment manager – It either refers to a personwho manage funds on behalf of the people or a company that controls investmentdecision on behalf of the people.
– An investment management isnot a license as people in real life use it in general when making decisionsabout anything involving money, so it is not an official title so they arehired based on their abilities in managing funds & investment in the mostefficient way.- Types of investmentmanagers: Certified financial planners (CFPs), A Financial advisor(FA), Portfolio managers (PM), Wealth Investment Managers, Advisory InvestmentManagers, Money Investment Managers, Asset Investment Managers- Role of investment manager:a- Choose best strategy toinvestb- Analysis of finance in themarket & help in choosing stock & assetsc- Monitor investmentregularlyd- Maximize profit ofinvestinge- Provides advice on areas toinvestf- Handles decision ofinvestors with great discretion. processes involved in investment management- Recruiting a professional manager,doing research on assets, asset classes, & securities to determine whichones are the best & which ones they should avoid, doing reports for clients,doing settlement, marketing, dealing in stocks, & doing internal audit. Alsohiring professional marketers, trainers, staff to ensure compliance with thelaw & regulations, financial controllers, & experts in computer. And asthe firm grows the complexity increase. the structure of portfolio- Conducting an assessmentfor each client’s needs & risk is a necessity from the veryfirst beginning to choose the appropriate investment.
1- Asset allocation- It is considered the central theme and primary factor in determining results. – The biggest mistake investors make is not paying enough attention toasset allocation. 2- Specialist Managers- The more management stylesrepresented in the portfolio, the greater the diversification and the less riskfor your money.- Each manager has anexpertise in a specific market substyle.- These managers are employedto invest in that mandate alone.3- Portfolio Structure- Diversifying portfoliowithin and across asset classes and styles, which helps access the returnpotential of the full range of financial markets.
– The high level ofdiversification in portfolios helps manage investment risk and smooth outperformance.- It further enhancediversification with alternative investments, real estate, and otheropportunities when appropriate.4- Continuous Management- Portfolios tend to drift fromtheir original allocations as different sectors of the market appreciate ordepreciate over time. Some fund objectives may also change over time.
Investmark addresses these types of changes via a two-step process:a- Your asset mix issystematically rebalanced to its target points.b- Ongoing monitoring andmanager reviews ensure that managers’ investment styles remain consistent withtheir assigned objectives.* Asset allocation strategies isnot guaranteed to generate profit or protect against loss in markets that aredeclining. Also diversification as the market declines as a whole not just acompany or two.process of investment management1- Setting investment goals& objectives- First the investor decideon his main objective which varies from one person to another depending ontheir preference.2- Creating investment policy- Allocating assets in themarket (equity, debt, long term, short term, real state, etc.
)3- Selecting strategy for portfolio- The strategy should alignwith the investment objectives & policies, otherwise the whole process willnot work.4- Asset selection- In this stage the portfoliois becoming real and actual investment is made5- Evaluation & measurementof progress & performance- Periodical evaluation ofthe point where the portfolio is at & the objectives set as a benchmark, aswell as risk & return. asset management & difference between asset & investment management- It has a huge similaritywith investment management as it is the management of assets, but assetmanagement looks for the highest return & most profitable assets to investin & is very expensive so it is not for everyone only for wealthy peoplewho can afford it, corporations, or government, mainly people who has a large well-diversifiedportfolio.
The firm usually charge fees as a fixed % of total owned fund &others also charge as a % of profits.- Asset management mainlyinclude balancing risk, cost, & benefit with the targeted objective ofinvestment by making the right decision & optimizing value – It includes a lot of roles,such as property asset management, asset liability management, management ofliquidity risk, interest rate risk, currency risk.- Investment management isrelated more to trading in securities, stocks, or bonds. It can be done byanyone even the investor himself.- Banks offer both services particularlyprivate ones.- Investment management includes analysis offinancial statements, management of portfolio strategy, monitoring ofinvestment, & analysis of assets.challenges of owning an investment management firm- Profit & return isdirectly linked to the market, so if market falls or valuation of the stocks& securities decreases it will affect the performance of the companydeeply.- During crisis or times whenmarket falls, clients tend to be not very patient as the firm may not be ableto keep average performance in suchtimes- Successful & talentedmanagers may be haunted by competitors.- As clients may look atperformance of a single manager & others may look at performance of theentire company, the firm must hire very successful managers which is verycostly.- Managers that generate highreturns may become wealthy enough to leave the job and start managing their ownfunds and investment.