An asset manager is a financial company that manages and invests clients’ assets or portfolios on their behalf, in line with clients' goals and risk tolerance. Asset managers also take into consideration other factors, such as clients’ income needs, taxation, and any personal preferences or traits in the case of individual investors. Some asset managers are independent, while many are owned by banks and insurance companies.
As asset management is an expensive, tailor-made service that also involves a minimum investment amount, clients are typically wealthy individuals and institutions.
Besides such wealth management services, asset managers also offer pooled investment vehicles like mutual funds or ETFs (exchange-traded funds). These are accessible to virtually any investor. Such funds have a pre-defined investment objective or theme, so individual investors can select the ones most suitable for them; either by themselves or with the help of an investment advisor.
A relatively new development is the emergence of robo-advisors. These are automated asset management services where, for a low fee, an algorithm assembles an investment portfolio for you based on your financial goals and risk preferences.
What does an asset manager do?
An asset manager makes investment decisions based on comprehensive research and analysis.
Asset managers invest funds from their investors into a wide range of assets to increase the overall value of client portfolios. These include standard products like stocks and bonds, as well as alternative investments such as property, commodities, currencies, hedge funds, infrastructure or private equity. Bonds and equities continue to make up the majority of asset classes though, with a combined share of almost 80%, according to a joint study by The Thinking Ahead Institute and Pensions & Investments.
Investors typically deposit cash into a client account. Asset managers then buy and sell securities and other investment vehicles in line with the investment strategy of each client. “Client requirements for returns are increasing, which is tending to favour products that may involve higher risk,” according to the study.
Who is the largest asset manager?
BlackRock has been the world's largest asset manager since 2009, according to the Thinking Ahead Institute's ranking of the world’s 500 largest asset managers, based on total assets under management (AUM). Among runners-up, Vanguard and State Street have ranked consistently in the top three in recent years.
The biggest European asset managers include Germany’s Allianz Group, France’s Almundi and Switzerland-based UBS.
What else do you need to know about assets and asset classes?
If you'd like to broaden your knowledge, check out the following articles:
- Investment Asset Classes
- What are liquid assets?
- What are tangible assets?
- What are alternative investments?
- Are stocks liquid assets?
- What is asset allocation?
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