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Asset Management
Managed accounts are a portfolio of stocks or bonds chosen and managed by professional investment manager who makes the buy and sell decision. These account are personalized to the specific needs of the account holder. The advantage of these account are the investment freedom and ability to do what they want with the investments within the portfolio made by the money manager base on the individual investors goal and objectives. The term asset management is often used to refer to the investment management of collective investments, whilst the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of private investors, normally wealthy, may often refer to their services as wealth management or portfolio management. Each managed account has an investment objective, and each manager oversees multiple individual accounts invested in the same basic portfolio to meet the same objective. Investors may be institutions like insurance companies, pension funds, corporations or private investors; both directly via investment contracts and more commonly via collective investment schemes. While managed accounts resemble mutual funds in some ways, with a managed account you own individual securities rather than shares of a common fund.
The investor is able to request that the manager avoid certain investments, which it cant be done in mutual fund. Through the broker you might ask the manager to sell certain holdings in your account to realize capital gains or losses. The Fund manager or investment advisor in the U.S. refers to both a firm that provides investment management services and an individual(s) who directs fund management decisions.
There are no phantom gains in managed accounts. Those gains can occur if a mutual fund realizes a profit from selling an investment and credits the investors with a capital gain even if theres no actual increase in the account value.
However, the minimum investment is usually substantially higher for a managed account often $100,000. Plus, the annual fees, which are included in the amount you pay the financial professional who recommends the account, may be higher than the fees on a mutual fund of similar value.
The provision of investment management services includes elements of financial analysis, asset selection, and stock selection; plan implementation and ongoing monitoring of investments. Investment management is a large and important global industry in its own right responsible for caretaking of trillions of dollars, euro, pounds and yen. Coming under the remit of financial services many of the worlds largest companies are at least in part investment managers and employ millions of staff and create billions in revenue.
In the asset management account each client has a separate account. But the asset is a commingling of investment for several clients. After this the investment company start the investment pool of funds belonging to many individuals in a single portfolio of securities. In exchange of their commitment of the capital the investment company issues to each investor the new shares representing the proportional ownership of the mutually held securities portfolio.
The term asset under management is the total assets value that a hedge fund, mutual fund or the portfolio manager manages and administers for itself and its customers the firms become custodian of the capital and with the full discretion of who to manage it
with the objectives of the investors some of this are the T. Rowe Price Association, The Vanguard Group, Fidelity Management and etc In recent years the managed account has been growing very fast.
Hedge Funds
Hedge Funds are an investment vehicle designed to manage a private, unregistered portfolio of assets according to any if several strategies. The investment strategy often employs arbitrage trading and significant financial leverage like short or long selling, borrowing and derivatives positions while the compensation arrangement for the manager typically specifies considerable profit participation. The investors that are considering for this fund are a limited range of qualified investors. The hedge fund investor are Swiss private banks, high net worth families & family offices, Japanese proprietary capital, US endowments, foundations, pension funds, middle east investors, structured notes for Japanese institutions and German investors, insurances companies, accredited individual investors, and institutional investors.
Hedge funds have a higher degree of flexibility in the instruments that the fund can invest in. For example, a hedge fund can invest in nearly any and every investment instrument that exists. Many but not all hedge funds invest in derivatives-instruments that derive from an underlying security. Some of these instruments include options, futures, convertibles and warrants. There are four main reasons hedge funds use derivatives: to reduce risk, to capture a managers opinion in a cost effective way, to exploit inefficiencies in the pricing of derivatives arising from intrinsic pricing complexities, and to increase exposure without excessively expanding the funds balance sheet.
Hedge funds are generally less liquid than traditional investment vehicles. Most allow redemptions on a quarterly basis, but very few allow redemptions more frequently than that. Some hedge funds have longer lock up periods, like one year, so that they can properly implement their trading strategy without concern for fluctuations in assets.
Mutual Funds vs. Hedge Funds
The different between a Mutual fund and a hedge fund is that Mutual Funds cannot protect portfolios from bear market, unless they sell or remain liquid, the future of the mutual fund depends on the market in which they are invested. Another thing is that they are supervised by Regulatory Authorities and are bound by limitations restricting their portfolio and permitted instruments.
Hedge funds in a declining market can find protection by implementing different hedging strategies and can generate positive returns. The future of hedge funds tends to have a very low correlation with the direction of financial markets. On contrary of mutual funds these funds leave the manager with greater latitude to fund characterized by unique traits in terms of the financial instruments to be employ management style.
History
The pioneer in hedge fund is Alfred Winslow Jones was a Harvard graduate and former