What is Asset Management? | Definition and Example

Asset management involves monitoring the investment portfolios over time, acquiring, maintaining, and trading investments with the value growth potential. Several professionals offer asset management services to businesses, including individual asset managers, investment banks, financial service providers, etc. These professionals consider the current asset portfolio and ways to mitigate risk and enhance its value. 

Managing and taking care of all kinds of assets is critical for firms to ensure seamless retrieval and liquidity. Being intelligent and informed in investing and utilizing funds allows for growth potential. 

Portfolio growth doesn’t occur by managing internal assets, but also by analyzing the market trends and researching at micro and macro levels.

Asset management in a nutshell

  • Asset managers provide portfolio growth by adding different asset classes such as bonds, property and equities.
  • The use of experienced asset managers saves time, money and effort and ensures a balanced level of investment risk.
  • Asset management for binary options involves hiring a third party to trade and monitor portfolios, but is becoming less common.

Understanding asset management’s working

The asset management service providers apply strategies to design, maintain, and grow the client’s asset portfolios. In addition, they ensure diversification by adding various asset classes, including bonds, real estate, mutual funds, equity, commodities, cash, marketable securities, etc. 

Employing expert asset managers ensure businesses function under constant expertise. They save the firm’s time, money, and effort by handpicking suitable options. In addition, these professionals ensure the risk remains balanced by keeping investments in equally risky and less risky options.

The asset management process goes as follows:

  1. Assessing existing assets and determining the asset portfolio’s purpose is the first step toward managing assets. 
  2. The asset manager analyzes existing assets in-depth to check their ability to meet the current objectives.
  3. Then, they check the extent to which assets can realize their value and purpose.
  4. The manager assesses future endeavors, their feasibility, etc., and on this basis, identifies the new assets needed. 
  5. These professional financial service providers monitor the life cycle of the asset, its efficiency, and maintenance costs.
  6. Further, they measure the asset depreciation rate and its effect on the overall value. Moreover, these determine the potential risk in the quantifiable form attached to each asset. 
  7. The end comes at the manager estimating the asset’s lifespan, salvage amount, and disposal of strategy.

Examples of asset management 

The following are some instances of asset management:

  1. Well-known asset management institutions

The high-end clients opt for asset management service providers who offer a personal financial advisor alongside these services. Several investment options exist to enrich the client’s portfolio. Institutions like BlackRock check the client’s tax situation, liquidity requirements, and income. 

  1. Mid-value asset management firms

Companies like Vanguard are available for small investors, ready to invest in a mid-range amount. They may look to options like mutual funds as the resources get pooled together. These clients do not stress about asset placement or structure. But, they do put assets in a central investment portfolio.

  1. Digital asset management techniques

Businesses looking to keep asset management internal can invest in digital tools specializing in these services and employees to work with them. In addition, algorithms will help handle portfolios with tracking software as the central database for assets. 

Summing up

Several asset management companies and individual managers handle different facets of the sector. It allows businesses to mitigate risks and enhance the value of their portfolio.

How to do asset management in your Binary Options portfolio?

Asset management for binary options means that a third party, typically a binary options account manager, is hired to trade on your account and monitor your portfolio. In the past, this method was more common, but it has become less common nowadays.

About the author

Percival Knight
Percival Knight is an experienced Binary Options trader for more than ten years. Mainly, he trades 60-second trades at a very high hit rate. My favorite strategies is by using candlesticks and fake-breakouts

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