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Asset Management

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Industry Overview

What is asset management?

An asset is classed as either tangible or intangible (mostly financial), and is the term given to anything which has a value. In business, investors seek to procure the best deals on assets; the more valuable and plentiful your assets, the more you’re worth. And this is where asset management steps in!

Asset management professionals will work on behalf of institutions like large corporate clients or even governments, and clients such private investors; usually high net worth individuals and retail investors. Clients can include so-called venture capitalists – investors with a high amount of capital who are willing to take a risk and invest in a brand new company. Think Dragons’ Den-type business tycoons!

Their role is to manage or contribute to the management of a portfolio. A portfolio is the collection of assets a client holds; whether they be financial, such as stocks or bonds, or real assets. Asset management is all about making the right investments or sales of assets on the behalf of the client, or providing them with advice if the client makes deals personally, so that they can generate as much revenue as they can. As such, asset management has close links with the wealth management and investment banking industries.

In layman’s terms, asset management can be broken down into the management of a number of different ‘asset classes’. These include equities (shares held in a company, also known as stocks), alternative investments, property (such as real estate), bonds, and foreign exchange products; primarily foreign currencies. As a rule, professionals in this field can be responsible for at time ginormous sums of money. Trillions of pounds’ worth of assets are traded on the foreign exchange market alone every day! 

The roles that make up this industry spin off into various areas, for example researchers and analysts of markets up right to portfolio managers, who may take instruction from wealth management departments. They may also at times have direct contact with the client or client representatives.

Asset management professionals often specialise in a particular industry or type of investment. Each industry is so vast and fast-moving that it would be pretty hard to take a generalist approach to this type of work! Clients expect their assets to be managed by experts with the pinnacle of knowledge for the industry. Markets are constantly moving, so those interested in this type of career need to work hard to keep up with developments and expect long hours with night shifts at times. Circumstances can change rapidly overnight, which can call for quick thinking and quick actions. Success is gauged by how your portfolio is performing! Asset management demands top skills in financial analysis and the ability to think ahead and utilise information, perhaps provided by actuaries, to determine the right move and develop a prosperous long-term strategy for a client. Guts are also a prerequisite; some more aggressive strategies are very risky, such as those implemented in hedge fund management. Get it right and the rewards could be great; get it wrong and you could lose A LOT of money for your client.

The more money you can generate for your client, the more you will earn for yourself. There is the opportunity to earn a rather pretty penny in this industry as you work your way up the ladder! You might start out as a researcher or analyst, and as you develop your core industry knowledge and a feel for the markets it’s possible to work up to portfolio manager. Progression is usually accompanied by study for specific professional qualifications such as the CFA (Chartered Financial Analyst). 

In most cases people in asset management are employed by banks, asset management firms and funds. Networking is also an integral part to this industry; whether it’s about keeping up rapport with clients or developing contacts for potential new investment opportunities.

Why is asset management important?

Asset management is crucial to keep businesses moving and growing, and to protect them from bankruptcy!  Investments allow for new companies to develop and grow, and for the world economy to keep on ticking.

Areas of asset management

Hedge Funds Working with these types of funds involves applying high-risk strategies within asset management. The aim of the game is to make money within struggling markets. If the strategies work, investors into these funds can usually expect a much higher rate of return.

Private Equity – Professionals in asset management who specialise in private equity deal with stocks that aren’t publically traded on a stock exchange; rather the private equity market. It means responsibility for huge amounts of money and a wide variety of types of asset.

LiquidityThis term refers to how easy it is to buy or sell an asset without affecting its price. In asset management it involves managing liquidity products. Liquid assets are those that can be easily sold or bought on a market. Essentially, they are anything which can be readily converted into cash upon a sale, such as currencies.

Currency Management All about making money with money, the foreign exchange market (also known as the Forex Market) deals in the trading of currencies; yet another specialist area for asset management professionals.

Real AssetsThis refers to assets that are not financial assets, but rather physical items which have value, for example gold, silver or other precious metals, oil, real estate and land. These assets can be bought and sold in the same way as financial assets.

Bonds – Many large organisations and governmental institutions aim to generate more money through issuing bonds. Essentially, they lend money with the arrangement that they will get that amount plus interest back by a specific agreed date; another form of security that asset management specialists can handle.

EquitiesEssentially, equities are shares in a company which can be bought and sold on the financial markets to generate revenue and avoid loss for the client. Asset management roles in this area are mostly in the public stock markets.

Alternative InvestmentsThese investments are to do with investors thinking outside of the box and placing money in anything that isn’t part of the traditional asset classes of cash, stocks or bonds. Specialists in this field could handle investments in anything from new ventures and technologies, to art, antiques, distressed securities or hedge funds.

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Alternative Investments

Managing 'off-the-wall' assets.

Bonds

IOU a career in asset management.

Currency Management

Making money by utilising currency fluctuations!

Equities

The dragon's den of company ownership 

Hedge Funds

A way of making capital reserved for the extremely weathly

Private Equity

Investments into private businesses that don't appear on the stock exchange

Real Assets

Managing assets that are physical entities.

Asset Management Stereotype Breaker
Smash 'em up

Asset Management Jargon Buster
Crack 'em

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