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What is investment management?

Investment management definition

Investment management definition refers to the professional organisation of assets and securities, such as shares, bonds, commodities and real estate, to meet a defined financial objective for the benefit of the investor. In this scenario, both private investors (directly via investment contracts or via collective investment schemes, such as exchange-traded funds or mutual funds) and institutions (such as corporations, educational establishments, insurance companies, pension funds and charities) may act as investors.

Also referred to as money management or wealth management, it is a broad term for trading within a portfolio. Simply put, investment management meaning refers to the management of securities and assets in this portfolio as well as the strategy employed to meet the investor’s objectives.

What you need to know about investment management…

An investment manager is an individual or firm that manages an investment portfolio on behalf of a client. They conduct research and create an investment strategy to meet the client’s goals. They decide how to allocate the client’s portfolio correctly by continuously monitoring and coordinating bonds, stocks and other investments. The manager buys and sells those investments and monitors the portfolio’s overall performance.

Some investment managers may act as financial planners, offering holistic financial advice regarding taxes, insurance, cash-flow management and estate planning. They do not only oversee a client's portfolio, but also coordinate it with other assets and life objectives.

For example, many investment management firms work with high-net-worth clients to address their investment management and financial planning needs, as well as coordinate the services of other professionals like accountants and lawyers.

Generally, investment management can apply to both corporate finance and personal financial advice. An investor may employ a financial advisor to manage their investment portfolio – overseeing budgets, taxes, accounts and trades. Investment management for corporate finance involves sustaining a company's tangible and intangible assets.

Therefore, the most popular investment management services include portfolio strategy and implementation, financial statement analysis, monitoring of existing investments, asset allocation and stock selection.

Top global investment management companies include:

  • BlackRock
  • The Vanguard group
  • Charles Schwab
  • JPMorgan Chase
  • Allianz
  • BNY Mellon Investment Management
  • Crédit Agricole Group
  • Fidelity

Once you decide to hire an investment manager and choose an investment management firm, you will probably be required to set up an investment account with them or at a brokerage they work with. If you already have existing accounts at other companies, such as taxable brokerage accounts or IRAs, they will help you to transfer your money.

When making investment decisions, the manager takes into account a number of factors, from your time frame to your savings goals, such as education, retirement or purchase of a house. You will be asked to answer questions to help them assess your risk tolerance. Market conditions, historical performance, investment fees and tax efficiency also determine the manager's investment strategy.

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