What Does an Asset Manager Do?
An asset manager’s primary function revolves around making investment decisions on behalf of their clients. That includes determining whether and when to sell or buy specific securities.
Asset management firms spend time researching and analyzing various investment opportunities. How this is done typically depends on the firm’s overall investment strategy. For instance, an asset manager may rely more heavily on fundamental analysis than technical analysis or vice versa. They may study stock market trends on a narrow or broad scale to decide where to invest.
In terms of where asset managers may choose to invest their clients’ portfolios, the list includes the standard investment options, such as stocks, mutual funds and bonds. But depending on the client, an investment manager may also look toward alternative investments, such as real estate, hedge funds, commodities, currencies, private equity Master limited partnerships.
In a typical asset management relationship, investors deposit cash into a money market account or brokerage account which their investment manager has access to. The investment manager can then buy or sell investments as needed, according to the investment strategy they’re pursuing on behalf of their client. The management itself can be either Discretionary or non-t discretionary. In the former, portfolio managers make investment decisions at their own discretion; in the latter, investment decisions must be discussed and approved by clients before portfolio managers make trades.
Asset managers can be fiduciaries but they’re not required to follow a fiduciary standard. Observing fiduciary duty means that an investment professional is legally and ethically bound to act in the best interests of their clients at all times.