Investment management refers to the professional management of various securities and assets to meet specified investment goals. It covers a wide scope including stocks, bonds, real estate, private equity, hedge funds, ETFs, mutual funds, and more. With trillions of dollars worth of assets under management globally, investment management plays a vital role in the financial system. This article will examine the key concepts, major types, and overall scope of investment management.
Core concepts of investment management
Investment management centers around the investment process of asset allocation, portfolio construction, risk management, and performance evaluation. Key roles in investment management include portfolio managers, research analysts, traders, compliance officers, and client relationship managers. Investment managers have a fiduciary duty to act in clients’ best interests when managing their portfolio assets.
Major types of investment management
Investment management covers various asset classes and strategies. Core types include stocks, bonds, real estate, hedge funds, private equity, ETFs, mutual funds, indexes, and more niche offerings. Investment styles range from passive index investing to active fundamental and quantitative strategies. Top investment management firms offer products across sectors, geographies, market caps, and factors to provide comprehensive solutions.
Investment vehicles under management
Investment managers utilize different structures to implement investment strategies and manage money. These vehicles include mutual funds, hedge funds, separately managed accounts, ETFs, and more. Each vehicle has pros and cons related to liquidity, regulation, fees, customization, and other factors that determine suitability for investors.
Scope and size of the investment management industry
Globally, investment managers held over $100 trillion in assets under management in 2022. The US accounts for the largest share at over $50 trillion. Significant growth has been driven by rising global wealth, shift from active to passive investing, increased use of technology, and expanding retirement assets.
In summary, investment management encompasses various asset classes and strategies utilized by professional managers to meet investment objectives. It plays a critical role in financial markets and the economy, with trillions in assets under management globally across stocks, bonds, real estate, hedge funds, private equity, ETFs, mutual funds, and more.