Asset Managers invest money on behalf of their clients. With the objective of achieving the highest possible return, within the set agreements. Clients include pension funds, insurance companies and institutional investors, but private investors can also make use of an asset manager. What is invested in, depends on the client’s requirements, the so-called mandate.
What is asset management?
Asset management is the management of a portfolio of assets that you invest for a client. On the basis of the mandate and by means of selection, risk analyses and market developments, you determine where you do or do not want to invest. This way, you grow your portfolio with as little risk as possible. Within asset management, a distinction is made between individual asset management and collective asset management.
A portfolio can consist of bonds, shares or a combination of both, but there are also portfolios in real estate or green investments. Alternative investments are a growing investment in the current market.
What is a mandate?
The mandate is the set of rules that the client gives to the asset manager about where or not to invest.
These rules are entirely down to the discretion of the parties involved and often contain clauses about:
- Investment categories, for example shares, obligations, real estate, or even natural resources;
- Geography, in what countries and regions assets can(not) be invested;
- Currency risks, in which currencies assets can be invested and whether the currency risk must be hedged or not;
- In addition, specific investments can be excluded that for example do not comply with rules on corporate and social responsibility, arms and tobacco or male-female relationships.
Based on the mandate, a benchmark can be agreed upon. The benchmark is an index against which the growth of the assets can be compared. A simple example is that if the mandate only allows investment in AEX funds, then it makes sense to use the AEX as a benchmark. If the returns achieved by the asset manager are higher than the AEX, the asset manager has done well, better than the index.
Net Asset Value (NAV)
Reporting is a daily task of an asset manager. The Net Asset Value (NAV) is reported daily. The NAV is the value of all underlying investments in the portfolio. Making the reports and calculating the NAV is a specialised field.
What will you do as an asset manager?
The asset manager takes care of a portfolio of assets. It is the job of the asset manager to analyse this portfolio for possible risks, costs and revenues. With the information obtained, well-considered choices can be made so that the portfolio performs optimally for the client. Subsequently, the value of the portfolio grows with as few risks as possible.
Activities of an asset manager
- Monitoring the performances of the portfolio;
- Carrying out risk analyses;
- Identifying costs;
- Determining the budgeting for the assets in the portfolio;
- Advising management regarding optimisations of the business processes.
Job requirements of an asset manager
- Minimum HBO/WO (higher vocational/academic education) thinking level;
- Excellent analytical skills;
- Knowledge of financial markets;
- Good communication skills;
- Independent and decisive.