72.Asset management as an investment service.

Investment management is the professional asset management of various securities (shares, bonds and other securities) and other assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations, charities, educational establishments etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds).

The term asset management is often used to refer to the investment management of collective investments, while the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as money management or portfolio management often within the context of so-called "private banking".

The provision of investment management services includes elements of financial statement analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Coming under the remit of financial services many of the world's largest companies are at least in part investment managers and employ millions of staff.

Fund manager (or investment advisor in the United States) refers to both a firm that provides investment management services and an individual who directs fund management decisions.

73.Goal of the investment management and how it works.

Key Principles

We have been ‘managing assets’ for a long time - however there are some vital adjectives that distinguish good practices in joined-up and optimized asset management from historical ‘merely managing the assets’. These adjectives are generic attributes:

Holistic: asset management must be cross-disciplinary, total value focused

Systematic: rigorously applied in a structured management system

Systemic: looking at assets in their systems context, again for net, total value

Risk-based: incorporating risk appropriately into all decision-making

Optimal: seeking the best compromise between conflicting objectives, such as costs versus performance versus risks etc.

Sustainable: plans must deliver optimal asset life cycles, ongoing systems performance, environmental and other long term consequences.

Integrated: at the heart of good asset management lies the need to be joined-up. The total jigsaw puzzle needs to work as a whole - and this is not just the sum of the parts.

Process

• Specification of investment objectives & constraints

• Choice of the asset mix

• Formulation of portfolio strategy

• Selection of securities

• Portfolio Execution

• Portfolio Revision

• Performance Evaluation

Key problems of running such businesses:

• revenue is directly linked to market valuations, so a major fall in asset prices can cause a precipitous decline in revenues relative to costs;

• above-average fund performance is difficult to sustain, and clients may not be patient during times of poor performance;

• successful fund managers are expensive and may be headhunted by competitors;

• above-average fund performance appears to be dependent on the unique skills of the fund manager; however, clients are loath to stake their investments on the ability of a few individuals- they would rather see firm-wide success, attributable to a single philosophy and internal discipline;

analysts who generate above-average returns often become sufficiently wealthy that they avoid corporate employment in favor of managing their personal portfolios.