What is Asset Management?
Many have been asking. Few understand. Hopefully this post clarifies.
Let's start with the apophatic definition.
Asset management is not real estate.
Asset management is not operations.
Asset management is not wealth management.
So what is Asset Management?
Asset management is active investing. Stock/Bond picking. Think Peter Lynch and Bill Gross. Traditionally, this is working for a large asset manager like Fidelity or T Rowe Price. The job is similar to hedge funds but the company structure is different. Asset managers manage mutual funds and similar products for clients. Hedge funds usually run a few strategies at most and sometimes less products. Asset management firms may have 50 strategies and products.
The industry is uber competitive. The large players in equities are T Rowe Price, Fidelity, and Capital Group. They all take less than 5 interns a year at the undergrad level. They used to only hire from m7 MBA programs. Pod boys want these jobs. You work 50-60 hours a week with similar pay and less stress. Job stability is great. Turnover is low.
Thanks for coming to my ted talk.
Based on the WSO Dataset, Asset Management is a sector within the finance industry focused on active investing, which involves stock and bond picking. This field is distinct from real estate, operations, and wealth management, emphasizing its unique role in the financial landscape. Professionals in asset management, akin to figures like Peter Lynch and Bill Gross, typically work for large asset managers such as Fidelity or T Rowe Price, managing mutual funds and similar products for clients. While there are similarities between asset management and hedge funds in terms of investment activities, their company structures and the breadth of strategies and products they manage differ significantly. Asset management firms may offer a wide array of strategies and products, potentially numbering up to 50, in contrast to hedge funds, which usually focus on a few strategies and sometimes even fewer products.
The asset management industry is highly competitive, with major players in equities including T Rowe Price, Fidelity, and Capital Group. These firms are known for their selective internship programs, often taking fewer than five interns a year at the undergraduate level and traditionally hiring primarily from top MBA programs. Positions in asset management are coveted for their work-life balance, offering 50-60 hour work weeks with competitive pay, lower stress levels compared to some other finance roles, job stability, and low turnover rates.
Sources: Is asset management underrated?, Why Work in Asset Management?, Asset Management vs Investment Banking 101, AM vs HF: The Business of Our Business, Difference between Asset Management vs Investment Management?
Cringe
You are a student (unserious) from canada (deeply unserious) who is a prospective monkey (high finance spectator.) BTW what you said is wrong and I will not waste energy trying to refute it. Thx
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I do not know much about AM and have interned at a FoF - Investing arm of a wealth manager previously, and was curious to hear if in AM if firms peform any shorting plays - like a small asset allocation of like 1-2%?
I get why HFs do it - to reduce Beta exposure and some HFs strategies aim's are to not "beat the market" but provide returns irrespective of the market, but AM I would presume by nature are trying to outperform the market so would shorting sometimes be a good thing?
Thanks - please feel free to correct me where I am wrong.
Shorting is considered an “alternative” investment. Traditional AM is just buying stock. Some shops have alternative products where shorting is used.
AM is the art of siphoning boomers' wealth.
That would be PWM sir.
They are the same.... Everyone I know in the industry has their PA in ETFs.
It’s just investing on behalf of your clients using your clients’ money and getting a fee for the client service you provide and in some case a cut from the excessive investment return. That’s it.
Of course there’re different asset class ( FICC, equity, alternatives), strategy ( quant, fundamental ), style ( passive, active ), market ( public, private ), frequency ( HFT, low frequency ), different types of clients ( institutional, retail, rich individual ) so it includes a vast amount of things. Both PE and hedge fund are a sub-genre of asset management. PWM is also a sub-genre of asset management.
Cut of the excess return? Sir, we charge BPS on AUM regardless of investment performance. Performance gets clients in the door. After that we keep charging until they check out.
Imagine getting paid to provide a service. That’s so wild. So corrupt. Wow. I’m in shock. I’m going to throw up.
You’re talking about mutual fund which is a sub-field of Asset management. Remember that hedge funds and PE are also sub-fields of Asset management, it’s just people rarely refer to them as asset management
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