| We are sure you have heard of financial firms | | | | Experts conduct in-depth research to explore the |
| that are in the business of Asset Management, | | | | potential of various stock markets, profile the top |
| but would like to know what the fuss is all about. | | | | firms and assess the risks and volatility with the |
| Why do you need asset management? What do | | | | objective of giving the investors the best possible |
| these firms offer that you cannot help yourself | | | | returns. |
| with? For one, most of them are established, | | | | Balanced: Such funds tend to invest in a mix of |
| credible firms that mean business and often work | | | | assets such as preferred shares, bonds and |
| wonders with money. Their trick? The experts | | | | common stock with the intention of providing |
| and knowledge bank at their disposal. | | | | stability in income as well as growth. In this |
| Asset management refers to the management | | | | strategy, investments in every asset class tend |
| of a client’s financial investments. Usually, | | | | to be within set limits. Balanced funds are more |
| asset management firms pool the collective funds | | | | suitable for investors with long time horizons and |
| of several investors and place them on their | | | | a higher risk tolerance. |
| behalf in different types of instruments. These | | | | Money market: Money market funds invest in |
| firms are also called mutual fund companies, and | | | | commercial paper, treasury bills and other liquid |
| they issue “units” of their mutual fund | | | | securities. Interest is credited monthly to |
| schemes to their investors. All asset management | | | | investors. Money market funds are safer, but |
| firms put a premium on risk management and | | | | their rates of return are lower, approximating |
| maximization of returns and deploy different | | | | short term interest rates. |
| investment strategies depending on the ultimate | | | | Commodity: Commodity funds invest in units |
| goal of the client. Different strategies result in | | | | linked to different commodities – such as gold |
| different investment schemes, the most popular | | | | and other precious metals, or fuel. |
| of which are listed here. | | | | Fund of funds: Such funds invest in other mutual |
| Fixed income: These investments are meant to | | | | funds, thereby mitigating investment risk further. |
| generate a regular stream of income and bring | | | | These are just a few of the most popular |
| stability to the portfolio. Generally, the funds | | | | instruments offered by asset management |
| underlying a fixed income scheme are invested in | | | | companies. The portfolios offered and strategies |
| safe instruments such as government bonds. | | | | employed vary from firm to firm. Duncan Hughes |
| Equity: As the name suggests, equity schemes | | | | has written a book called “Asset management |
| are those where the funds are primarily invested | | | | in theory and practice” available at a useful |
| in the stock market. These carry a higher risk | | | | resource for those of you wanting to know more. |
| than fixed income schemes, but also hold the | | | | The diversity of investment outlets, risk and |
| promise of better returns. Equity schemes could | | | | returns offered by asset management firms |
| be industry specific, wherein most of the | | | | often sees people multiply their fortunes. So, find |
| investment is in companies of a particular industry; | | | | your perfect investment scheme and maybe you |
| could be restricted to certain geographies, for | | | | can count your chickens well before they hatch! |
| example an Asia Pacific fund; or diversified. | | | | |