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Investment Management 

Investment management is the process of building a portfolio of stocks, bonds and other investments based on your goals. You can hire an investment management service, or manage your own portfolio.



What is Investment Management ?Investment Management ObjectivesHow Does Investment Management Work?

What is Investment Management ?

Investment management refers to the handling of an investment portfolio or a grouping of assets. It involves buying and selling assets, developing short- and long-term investment strategies, creating a tax strategy, and managing asset allocation. It can also include banking, budgeting, and other financial duties as well.

The term most often refers to managing the holdings in an investment portfolio and trading them to achieve a specific investment objective. Investment management is also known as money management, portfolio management, or wealth management.

Key Takeaways

  • Investment management refers to the handling of financial assets and other investments by professionals for clients.
  • Clients of investment managers can be either individual or institutional investors.
  • Investment management includes devising strategies and executing trades within a financial portfolio.
  • Investment management firms handling over $25 million in assets must register with the SEC and accept fiduciary responsibility toward clients.


Investment Management Objectives

It involves creating a portfolio of investments that generate returns while minimising risk. Other than this, there are various objectives such as 

1. Assess and manage risk

Investment managers must assess the amount of risk they’re willing to take and how to manage it on an ongoing basis.

2. Establish goals

An investment manager will help you determine your financial objectives and create a strategy to reach them.

3. Select investments

With a deep understanding of different asset classes, the manager will choose appropriate investments for the investor’s needs.

4. Monitor progress

The manager will track market conditions and adjust the portfolio accordingly to maximise returns while mitigating risks when necessary.

5. Maximise returns

Through careful portfolio management, investment managers strive to maximise gains while minimising losses over time, with attention given to tax efficiency and liquidity.

How Does Investment Management Work?

It is important to know how investment management works. This can be crucial in helping you make informed decisions when it comes to investing and managing your finances: 

  • Establish Investment Goals

Before taking the plunge and investing, it is essential to define your personal investment goals and objectives. You should consider elements like the level of risk you are willing to bear, what kind of returns you would be content with, for how long you intend to be an investor, and any moral considerations that could affect your decisions.

  • Establish a Plan

After you have identified your investment goals, decide on the strategy that fits best for you. You can choose between active or passive management options depending on how much effort and time you want to put into the process. Active managers opt for individual stocks based on their research to outperform market returns, while passive investors invest in index funds pursuing only traditional market indices movements.

  • Uncover and Choose Your Investments

After deciding on your strategy, you will need to research the most suitable investments for your portfolio. If you’re an active investor, this means studying individual stocks or other securities to identify potential investment options. You should consider factors such as a company’s financials, industry trends, and competition when making your decision. For passive investors who prefer index funds, selecting those that align with your goals is essential to maximise returns down the line.

  • Track Your Portfolio

After you’ve chosen your investments, it’s essential to observe them closely. This involves staying informed about the markets and keeping up with any news that may influence their value. 

  • Rebalance Your Portfolio

Periodically, you should look at how your investments have performed over time and determine if any rebalancing needs to be done. This means adjusting the mix of assets in your portfolio to stay aligned with your goals and objectives. Rebalancing may also help reduce risk and ensure that you take advantage of any market opportunities. 

  • Stay Informed

The final step in successful investment management is staying informed and up-to-date on the markets. This means reading market news, staying abreast of any changes to tax laws, and understanding how economic events may affect your investments. By staying informed, you can make better decisions about when to buy and sell assets to maximise your returns.

Types of Investment ManagementThe Bottom Line

Types of Investment Management

Investment management can take many different forms and vary based on the type of asset being managed such as

1. Traditional Investment 

This is the most basic form of investing, in which a portfolio manager invests in stocks, bonds, and other assets according to an investor’s goals.

2. Hedge Fund Investing

Hedge funds are investment vehicles that use alternative strategies such as leveraging debt and using derivatives to maximise returns.

3. Private Equity Investing

Private equity investments involve buying stakes in private companies that may not be publicly traded on stock exchanges.

4. Real Estate Investing

It involves purchasing properties to generate rental income or capital appreciation over time.

5. Mutual Fund Investing

Mutual funds are investment vehicles that pool money from many investors and invest in a wide range of assets.

6. Portfolio Management

This umbrella term encompasses all the other forms of investment management, where portfolio managers oversee the entire investment process, from selecting investments to monitoring performance and taking action when necessary.

7. Quantitative Investing

This type of investing involves creating algorithms or models to identify trends and uncover potential market trading opportunities based on sophisticated data analysis techniques.

8. Cryptocurrency Investing

This type involves buying and selling digital currencies, such as Bitcoin and Ethereum, to capitalise on price fluctuations in a highly volatile market.

The Bottom Line

Investment management, also known as asset management or portfolio management, is a service that helps investors achieve their financial goals and objectives through the professional management of their securities and assets.

By employing various investment strategies, conducting thorough research, and consistently monitoring market trends and portfolio performance, investment managers enable clients to optimize their investments and navigate the complexities of the financial markets

As fees and investment approaches vary, it is essential for investors to carefully evaluate their options and choose an investment manager whose expertise, strategies, and fee structures align with their unique financial goals and risk tolerance. Ultimately, a well-managed investment portfolio can significantly enhance an investor's long-term financial security and wealth.


Frequent Asked Questions