Asset management, which implies “management of financial assets” is one of the main drivers for channeling savings into the markets. It is also referred to as “Asset Management”. Indeed, this practice, which puts in front the investment and the saving has many advantages on the social and economic plan.
Definition of Asset Management
Financial asset management or portfolio management is an activity that consists of managing funds invested by investors with the aim of making them grow over a given period. These funds can also be held directly. This practice must be done in full compliance with contractual and regulatory constraints and requires the application of investment policies issued by the shareholder in question.
The portfolio manager must also take into account the risks associated with such a practice in order to obtain the best return. The funds managed are often Sicavs or investment funds (FCP). Each of them is likely to attract several investors who are interested in the asset class. The company entrusted with the role of creating and managing investment products is called “Asset Manager”.
The different types of asset management
From a legal point of view, there are several types of asset management:
– Mandated management: the management company is entirely responsible for portfolio management after a contract with the client. In this case, the management mandate is addressed to a single client, but it is possible to include rental management products.
– Collective management: it offers UCITS, which are products aimed at many holders who acquire units.
– Piloted management: the management company is in charge of asset management, but it operates according to the orders of the client.
Products managed in Asset Management
Just as there are different types of management, we can also mention different products to manage:
– Equity management: the manager invests mainly in stock market shares and is required to assess the return and the risks of his portfolio.
– Management of interest rate products: investment in money market and bond products. The manager is required to assess the maturity of the investments.
– Diversified management: portfolio diversification through investment in several asset classes.
– Alternative management: consists of private equity and hedge funds (speculative management).
What are the benefits of portfolio management?
First of all, asset management constitutes a pillar of the existence of modern capital markets. Asset managers play an essential role as market leaders at primary and secondary level, via their transactions. As a result, they quickly contribute to market liquidity by favoring price formation.
In addition, portfolio management makes it possible to apprehend risks more serenely. Risk is now considered an important factor to consider in any investment activity. Knowing how to manage risks is part of the dynamic, and can significantly improve performance. There is thus a growing aversion to risk taking.
Despite everything, the strong and constant growth of assets maintains the need to manage risks to better value them, or even to secure them. In this case, we consider the management as facilitators of risk-taking, since they will make it possible to better apprehend them by directing the investments of investors and allowing them to benefit from their rationality! You can visit https://www.seven-cm.com/ for more information and advice on asset management.