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What is Asset Management?
Asset management can be defined as the arrangement of a clients’ investments by a financial services company.  Normally this would be done through the use of an intermediary, for example an investment bank.  Investment banks offer a greater prospect of return than with other investors.

Usually this is only available to HNWI (High Net Worth Individuals), governments, corporations and other intermediaries.

When a client deposits money into an account, the money is placed into a fund which allows the client to save the money (as it would in a bank) and to generate a return over time.  The funds are handled by a fund manager who executes the transactions and suggests possible investment alternatives.

Portfolio Management
There are 3 main types of portfolios that can be used to help manage the risk or to increase the possibility of a reward.  These 3 are:

1. Bespoke Portfolio
The clients’ willingness to undertake risk is assessed along with what asset classes the funds should be invested in, which include:

  • Cash/Fixed interest
  • Fixed interest
  • Commercial property/Infrastructure
  • UK Equities
  • Global Equities
  • Emerging Markets

2. Multi-Manager Portfolio
Clients’ attitude to risk is analyzed and then assigned to a team of managers.  Can be expensive for the client.  Due diligence, amongst other factors, may also be assessed.

3. Discretionary Portfolio
The main difference between this type of portfolio and the other types of portfolio is that prior-approval is not required for a transaction to be made.  If the fund manager spots an opportunity or the possibility of a significant loss then he/she may freely change the investment to reduce the risk of loss or to maximize the potential gain.

 

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