Asset management, also referred to by portfolio management or by the English term Asset Management, consists of managing funds provided by investors so as to increase them over a given period. Managing financial assets involves balancing costs and risks against expected gains in order to achieve the entity’s defined objectives.
Definition of asset management
Portfolio management is an activity consisting in managing the money of financial partners in order to make it grow as much as possible, while realizing capital gains over a long period. The goal is to maximize profits, which suggests investing in stocks, mutual funds or even open-ended investment companies. You will need the use of the Evergreen Wealth Formula reviews there.
To be able to increase the yield, certain obligations must be taken into account. Management is then ensured by a specialized company called “Asset Manager”. Its role will be to manage the investment products issued by insurance companies and banks. See the site.
Asset Management is based on a few principles:
- Value: the assets are there to give value to the organization. Indeed, asset management focuses primarily on the value that the asset can bring to the organization.
- Leadership: this is an important factor in creating value. Leadership plays a vital role in the establishment and effective use of asset management in the organization itself.
- Alignment: The organization’s objectives are translated into activities and plans and into financial and technical decisions. Every decision on portfolio management helps achieve organizational goals.
- Guarantee: Asset Management certifies that the assets will fulfill their function. It concerns both the assets, their management and the management system.
These principles are in a way the values on which the practice is based so that it can achieve the objectives quickly.
The different types of asset management
The types of Asset Management are distinguished by their legal nature. We can cite:
Collective management: the investor owns fund units. In this case, the prospectus or the information notice establishes the rules between the client and the manager.
Assisted or advised management: the investor retains full powers. He benefits from the expertise of a specialist and manages his portfolio himself.
Management under mandate: the assets are entirely in the hands of a financial professional approved by the AMF. It could be an insurance company, a bank or a stockbroker.
Managed management: the funds are entrusted in such a way as to be managed according to the orientation chosen by the investor.
The different styles of portfolio management
As there are several products under management, we can also list different management styles, namely:
Equity management: selection of securities according to their potential vis-à-vis macroeconomic relations and the field of activity.
Diversified management: the manager’s objective is to diversify his portfolio through different investments in sectors of activity or categories of assets.
Management of interest rate products: the manager is almost entirely invested in money market and bond products, he will therefore have to estimate the maturity of his investments, the return of his corporate bonds as well as the change in interest rates.
This style of management aims to offer unitholders an ultimate and constant performance regardless of market trends. Indeed, we say of this management that it is “decorrelated from the financial markets”.