How Fund Management Plays an Important Investment Role?
Every now and then, we come across the term, fund management. To put it in simple words, it involves managing funds that we already own and maybe investing them in such a way that it gives us benefits at the end. Fund management is as important to big corporations as it is to individuals. The only difference is the scale at which these funds needs to be managed is huge. In the corporate world, fund management is known as asset management, where the asset manager assigned to the company helps them invest in various assets, to achieve their financial goals in the stipulated time. Asset managers or fund managers, advice high net-worth clients to invest in mutual funds, long only funds, long short funds, bonds, gold, stock, real estate, and everything that is only going to appreciate the value of the asset in the long term. These assets might take a little time for them to mature, but over the years, they become solid property in name of the client. Asset managers charge fees, usually, on the total amount of money that is invested. Some of the asset management companies also have a fixed rate of fees charged. The asset managers need to be doing a careful study of the market pattern and trends around the globe, to keep a track of what may be good for their clients and what could be harmful. Asset management companies do not put their own money in the investment. They invest their clientsu2019 money, which increases the severity of their responsibility. So, they also need to be able to identify any potential threats to the invested assets. If at all they feel that the particular asset might go into losses, then they should remove the asset (sell it off) before it loses more face value. Very recently, The concept of ESG funds in India has come around. ESG funds are those funds, that every big firm is encouraged by their fund management firm to invest in, in order to increase good will and credibility. These funds help the stake holders and investors in the business judge the companyu2019s practices. It tells them how much the company is dedicated in doing ethical practices. It makes clear that the firm believes in growing a sustainable manner, by not exploiting the environment, being considerate socially and ethical in their legal practices. A good asset management company can really turn the game around for their clients. Asset management companies have the power to make their client achieve their financial goals or their expansion goals in a smooth manner, while also taking care of their existing liabilities. A good asset manager will consider all these elements before planning of the investment journey of their client ahead. They also figure when an asset needs to be pulled out of investment and where the money pulled out should be newly put, to keep the cycle of investment going for their going smoothly. This highlights the importance of hiring the right asset or fund management company.
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