Investment management, also referred to as asset management, is the professional discipline of managing different financial assets, such as bonds, shares, and other financial assets, for the benefit of many investors. Investment managers are often paid on a performance-based pay scale, which means that the pay they receive is primarily based on how well their firm manages its investments. They make investment decisions that are suited to the needs of the investor and the overall goal of achieving specific long-term returns. The primary objective of most individual investors is to provide investors with high-quality growth capital by utilizing their wealth. Managers of financial assets are responsible for ensuring that these goals are met, by providing a wide range of investment strategies, as well as ensuring that appropriate risks are minimized.
An investment manager’s job is to assess the value of the firm and its underlying investments and to create a plan to ensure that the value of the firm exceeds the value of the investments. The manager typically will have access to the operating funds of the firm and may use this money to purchase holdings from other companies or to hire outside help for managing the firm’s portfolio. A manager will allocate portions of one investment portfolio to equities such as fixed income securities, preferred stocks, and ownership units, while reserving other portions for riskier investments such as distressed debt assets and real estate properties. In recent years, the vast majority of managed funds are being invested in low-risk categories such as available commercial property, distressed debt assets, and other available property.
Managers also analyze the performance of these investments, making recommendations concerning changes in the portfolio, as well as analyzing trends in the market and the way various companies in the portfolio are performing. They are usually required to give annual reports to the shareholders of their firm detailing the performance of all funds. This information is used to determine what classes of investments should be raised or sold, as well as what effect any changes will have on the overall return of the firm. As well, all bonds and stocks are tracked so that performance of those investments can be compared to the overall performance of the whole firm.