Knowledge Series: What is Asset Management? And How Does Mutual Fund Structure Work in Asset Management?
Asset management as the name suggests, is a process of managing funds, either for individuals or for companies. In asset management the investors capital is invested in diverse reserves like Bonds, Real Estate, Private Equity etc…, these asset management firms manage plenty of funds for either corporates or individual clients, within the lines of a particular mandate.
Asset management companies (AMC) could take care of these large funds either independently or by investing it in a fund run by them. Asset management companies run many funds which function with the objective of taking advantage of opportunities in a particular field or product or region, or in certain kind of company/industry, where they are sure about growth and expansion.
Asset management companies usually work with many investors and hence are able to diversify their client’s portfolios. This is a good thing as having a diverse pool of clients gives them greater value options, which in turn assures better capital appreciation opportunities, and thus mitigates the risks to an extent.
An asset management companies’ objective is that they strive to build the clients portfolio by making wise investment/purchasing decisions, which on a whole will build the capital value for their clients. This is different from others in the sector like insurance, mergers and acquisitions and stock purchases.
One will find many asset management companies working with ‘High Net Worth’ individual’s, who give them Unlimited Discretionary power or fiduciary powers in decision making.
Along with individual wealthy clients, asset management companies also have many corporate clients that they manage, these would essentially be Insurance Companies, Retail Banks, Pension Funds, who invest a large pool of individual savings to them, entrusting them to make investment decisions, for overall profits.
Asset Management firms stay profitable by charging a fee for managing their corporate or private clients, this is their method of earning revenue as unlike investment banks, asset management firms do not trade for profit. Since asset management firms, manage funds of retail banks, and pension funds in some sense they help us protect our money, and in turn provide a vital flow of capital to us, and the economy on a whole.
Asset management Companies are considered as one of the layers in the Mutual Funds Structure.
In the mutual fund structure, the asset management firm acts as the fund manager or like an investment manager to the overall trust. They take the fee to manage the funds and conduct all related activities, like initiating and launching the scheme, besides managing the funds, an asset management firm is also responsible for providing services to the unitholders or the investors. For example, an asset manager will liaise with elements like the broker, banker, auditor,
An asset management company has an assembly of individuals who engage and manage the business on behalf of the new clients. Some specific titles would be, Financial Analyst, Economist, Asset Managers etc…, Asset management has a wider scope for business and offers great appeal and opportunity for fresh graduates and experienced candidates both.
The field of investment banking deals with various financial aspects of a company or a firm. These may range from financial analysis, underwriting of securities, mergers and acquisitions, financial modeling and more. Generally, every investment bank has a capital market division, which basically deals with the financial products (securities), before they are available for trading in the market. Any capital market dealing in securities has both private as well government players. There are two verticals in herein, one which basically deals with the creation of new securities, which are commissioned by the government. The other section basically deals with the trading of these new securities, also known as over-the-counter market or the exchange market.
When it comes to the capital markets, the most distinguished position a person can hold, is in the sales and trading departments. These careers basically entail undertaking of various types of financial transactions including bonds, currency and securities. The one thing that these jobs demand, is a great knowledge in the field of markets, a finger on the pulse of human psychology and the perfect way to use your firm’s financial instruments. On a wider scale, careers in Capital Markets, require a professional to possess great analytical skills, have lightening fast reflexes, quick yet sure footing in the playing field (the trading market) and strong bargaining skills.
Under the umbrella of Capital Markets, come various vertical which deal with stocks, bonds and equities. Sales and trading is considered to be the distribution sector of any investment bank. Professionals in this field are basically supposed to act as a link, between the sellers and they buyers of bonds, securities, equities and more. There are also research jobs herein, where professionals conduct both quantitative and economic research as well as research of individual companies. Private wealth management and asset management are some other options in the field of capital markets. Any professional is supposed to posses exemplary people skills, as they are expected to deal with either high net worth individuals, or companies. Individuals in this field have the responsibility, to ensure that their company maintains long standing relations with all its investors and is able to reiterate its financial stand in the market, in keeping with the financial status of its rival companies.
Investment Banking jobs are quite popular and many people aspire to work in these capital market jobs. If you are looking for a career in capital markets, a background in commerce, accounting, or chartered accountancy is a requisite. Apart from this, various masters programs, which make a very stable base for careers in investment banks as well as capital markets. Today, there are many institutes that offer short term programs in specific verticals in the field of finance. Imarticus Learning is a leading education institute, which offers courses both in the classroom and online format. The thing that sets this institute apart from the others, is that they offer industry driven courses with great career assistance in the field of finance, wealth management, capital markets and more.
Earlier, a career in the field of Finance was considered as a back office job, which involved documentation and maintenance of the records in a back office. Today, with the rapid digitalization and with the corporate market making more us of numbers than real money, has made these careers extremely challenging. To know more about the career in Finance Industry, click here.
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