Difference Between Asset Management and Investment Management

Asset Management vs Investment Management
 

Knowing the difference between asset management and investment management can be helpful as asset management and investment management are terms that we hear quite frequently when discussing the management of financial resources and investments. Proper management of assets and investments are an important factor when it comes to the growth of wealth. While they may sound different asset management and investment management are quite similar to one another with a few subtle differences. The following article offers a clear overview of each term and explains the similarities and differences between asset management and investment management.

What is Asset Management?

Asset management is the management of assets including real estate, stocks, bonds, etc. Asset management services are financial services offered by professionals in which the value, financial health, growth potential and investment opportunities of various assets are identified in order to manage them successfully. The function of the asset management firm is to set financial goals with the investor, create projections, analyze data, and come up with a strategy for asset management and portfolio buildi ng. Asset management facilitates the investment in the most profitable assets and offers risk analysis as well as identify which assets offer the highest returns. Asset management services are quite expensive and are, therefore, only used by high net worth individuals, governments, corporations, etc. who possess a diversified portfolio of assets. Property asset management is one type of asset management in which the financial firm manages property such as office space, retail premises, industrial premises, etc. Property asset management includes rent collection, maintenance of buildings, lease management, etc. Asset liability management refers to the management of risks that are created through the mismatch between the firm’s assets and liabilities. These include the management of liquidity risk, interest rate risk, currency risk, etc.

What is Investment Management?

Investment management is more related to the trade of stocks and bonds and other types of investment vehicles in order to make a profit and grow investor’s wealth. Investment management can be done at various levels. It can either be done by the investor himself or by a professional financial firm. Investment management is carried out by private investors such as mutual funds and exchange traded funds or institutional investors such as corporations, insurance funds, pension funds, etc. Investment management included financial statement analysis, portfolio strategy management, asset analysis, investment monitoring, etc. Certain investors prefer to hand over complete control of their investment portfolio (including fund allocation decisions) to professional financial managers without the need for consulting with the investor when making major fund changes. Such services are known as discretionary investment management.

What is the difference between Asset Management and Investment Management?

Banks provide asset management and investment management under the private banking umbrella of services. As seen from the explanation above there are a very few differences between asset management and investment management. Also, these terms are often used interchangeably. The main difference between asset management and investment management is that the term asset management is used to refer to the collective management of investments and is, therefore, requested by larger high net worth investors with a large portfolio of assets at a significantly high cost. Investment management, on the other hand, can be carried out by large or small investors and can either be conducted by the investor himself or can be delegated to a professional financial services firm.

Difference Between Asset Management and Investment Management

Summary:

Asset Management vs Investment Management

• Banks provide asset management and investment management under the private banking umbrella of services.

• Asset management is the management of assets including real estate, stocks, bonds, etc.

• Asset management services are financial services offered by professionals in which the value, financial health, growth potential and investment opportunities of various assets are identified in order to manage them successfully.

• Investment management is more related to the trade of stocks and bonds and other types of investment vehicles in order to make a profit and grow investor’s wealth.

• Investment management includes financial statement analysis, portfolio strategy management, asset analysis, investment monitoring, etc.

 

Further Reading:

  1. Difference Between Asset Management and Wealth Management