Do you know what Asset Management is?

This service is offered by many companies and professionals today. Read this article to find out what asset management is and when you need to do it.

What is asset management?

Asset management is nothing more than a service that aims to make assets (or investments) more profitable and can be used by both individuals and legal entities. One who is responsible for asset management generates financial gains through quick investment decisions.

Asset management also encompasses several risk management techniques aimed at ensuring investor and client safety.

How does asset management work?

The contracted management company is responsible for each client’s investments and purchase decisions. In other words, it aims to make smart buying decisions that will facilitate the growth of the investment portfolio.

They may be responsible for handling stock purchases, insurance policies, mergers (when it comes to managing company assets), and sales or diversification of past investments.

Active investment management

After hiring this type of management, a specialist will constantly supervise your investments. He will make buy, sell or hold decisions with a certain number of funds through his knowledge, research, and market forecast. Always aiming to outperform the market, bringing better gains to the fund owner.

The cost of this service usually varies according to the variety of assets and the amount invested. Generally, companies charge approximately a 1% annual fee. However, always do some market research before choosing a simple company or service provider.

Passive management

Companies that adopt passive strategies will manage according to an established ratio rather than trying to beat marketing as the type of active management.

Since they require less active monitoring, fees for this type of management are usually lower, ranging from 0.2% to 0.5% per year. This follows the Efficient Market Hypothesis (EMH), which holds that no one can beat the market for a long and that passive management is the best option for long-term returns.

Asset management versus asset allocation

These two terms are often used with the same meaning. However, they mean very different things! Asset allocation is one of the main attributions of the asset manager, and it means allocating part of the resources to different types of investments.

Every investor (or fund owner) has risk tolerance and long-term goals used to guide managers when making an allocation decision. The risk of This balance and returns in the best possible way.

What should be taken into account when hiring an investment manager?

The main thing is to take it easy and not rush when hiring an investment manager. Keep in mind that this person or company will manage all your investments and ensure both long and short-term goals. Analyze companies and professionals thoroughly and look for as many references as possible.

Also, it is important to know if you are looking for a specialist or generalist. Most management companies are specialists in a certain area, able to design products and services that better meet the needs of their customers. it is possible to find, for example, companies that work only with passive investment or a long-term investment.

There are also generalist companies, which are ideal for an investor who has yet to find their fit in the field. There are even companies that specialize in wealthy personal investors and hedge funds. It all depends on your current financial goals, investment size, and asset portfolio type.