Investment finance in the market & help in choosing

Investment management

–         
Professional management
of assets (securities or assets), also called portfolio, money management, or
private banking, to reach a specific goal for the sake of the investor. Investors
may be individual (private through contract) or institution (as pension fund). The
global asset management industry consists of 70,000 funds.

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–         
In corporate finance is a
process of making sure that all available resources (tangible & intangible)
are used in the most efficient way, so they find ways to maximize the value of
the company by evaluation of assets, using accounting methods, schedules for maintenance,
& operation production management.

services provided

–         
Allocation of assets, selection
of stocks, analysis of financial statements, monitoring of investments that
already exist, & executing plans.

fund/investment manager

–         
It either refers to a person
who manage funds on behalf of the people or a company that controls investment
decision on behalf of the people.

–         
An investment management is
not a license as people in real life use it in general when making decisions
about anything involving money, so it is not an official title so they are
hired based on their abilities in managing funds & investment in the most
efficient way.

–         
Types of investment
managers: Certified financial planners (CFPs),  A Financial advisor
(FA), Portfolio managers (PM),  Wealth Investment Managers, Advisory Investment
Managers, Money Investment Managers, Asset Investment Managers

–         
Role of investment manager:

a-     
Choose best strategy to
invest

b-     
Analysis of finance in the
market & help in choosing stock & assets

c-     
Monitor investment
regularly

d-    
Maximize profit of
investing

e-     
Provides advice on areas to
invest

f-      
Handles decision of
investors with great discretion.

 

processes involved in investment management

–         
Recruiting a professional manager,
doing research on assets, asset classes, & securities to determine which
ones are the best & which ones they should avoid, doing reports for clients,
doing settlement, marketing, dealing in stocks, & doing internal audit. Also
hiring professional marketers, trainers, staff to ensure compliance with the
law & regulations, financial controllers, & experts in computer. And as
the firm grows the complexity increase.

 

the structure of portfolio

–         
Conducting an assessment
for each client’s needs & risk is a necessity from the very
first beginning to choose the appropriate investment.

1-      
Asset allocation

–         
It is considered the central theme and primary factor in determining results. 

–         
The biggest mistake investors make is not paying enough attention to
asset allocation.  

2-     
Specialist Managers

–         
The more management styles
represented in the portfolio, the greater the diversification and the less risk
for your money.

–         
Each manager has an
expertise in a specific market substyle.

–         
These managers are employed
to invest in that mandate alone.

3-     
Portfolio Structure

–         
Diversifying portfolio
within and across asset classes and styles, which helps access the return
potential of the full range of financial markets.

–         
The high level of
diversification in portfolios helps manage investment risk and smooth out
performance.

–         
It further enhance
diversification with alternative investments, real estate, and other
opportunities when appropriate.

4-     
Continuous Management

–         
Portfolios tend to drift from
their original allocations as different sectors of the market appreciate or
depreciate over time. Some fund objectives may also change over time. Invest
mark addresses these types of changes via a two-step process:

a-     
Your asset mix is
systematically rebalanced to its target points.

b-     
Ongoing monitoring and
manager reviews ensure that managers’ investment styles remain consistent with
their assigned objectives.

* Asset allocation strategies is
not guaranteed to generate profit or protect against loss in markets that are
declining. Also diversification as the market declines as a whole not just a
company or two.

process of investment management

1-      
Setting investment goals
& objectives

–         
First the investor decide
on his main objective which varies from one person to another depending on
their preference.

2-     
Creating investment policy

–         
Allocating assets in the
market (equity, debt, long term, short term, real state, etc.)

3-     
Selecting strategy for portfolio

–         
The strategy should align
with the investment objectives & policies, otherwise the whole process will
not work.

4-     
Asset selection

–         
In this stage the portfolio
is becoming real and actual investment is made

5-     
Evaluation & measurement
of progress & performance

–         
Periodical evaluation of
the point where the portfolio is at & the objectives set as a benchmark, as
well as risk & return.

 

asset management

& difference between asset & investment management

–         
It has a huge similarity
with investment management as it is the management of assets, but asset
management looks for the highest return & most profitable assets to invest
in & is very expensive so it is not for everyone only for wealthy people
who can afford it, corporations, or government, mainly people who has a large well-diversified
portfolio. The firm usually charge fees as a fixed % of total owned fund &
others also charge as a % of profits.

–         
Asset management mainly
include balancing risk, cost, & benefit with the targeted objective of
investment by making the right decision & optimizing value

–         
It includes a lot of roles,
such as property asset management, asset liability management, management of
liquidity risk, interest rate risk, currency risk.

–         
Investment management is
related more to trading in securities, stocks, or bonds. It can be done by
anyone even the investor himself.

–         
Banks offer both services particularly
private ones.

–         
 Investment management includes analysis of
financial statements, management of portfolio strategy, monitoring of
investment, & analysis of assets.

challenges of owning an investment management firm

–         
Profit & return is
directly linked to the market, so if market falls or valuation of the stocks
& securities decreases it will affect the performance of the company
deeply.

–         
During crisis or times when
market falls, clients tend to be not very patient as the firm may not be able
to keep  average performance in such
times

–         
Successful & talented
managers may be haunted by competitors.

–         
As clients may look at
performance of a single manager & others may look at performance of the
entire company, the firm must hire very successful managers which is very
costly.

–         
Managers that generate high
returns may become wealthy enough to leave the job and start managing their own
funds and investment.