‘Asset manager’ is not a one-size-fits-all description. Various different types of asset management firms exist, investing across different strategies, asset classes and client bases.
In addition to hedge funds and private equity firms, which we covered in greater detail in ‘Alternatives’, types of asset management firms include:
- Mutual fund companies: These firms are common in the asset management space, pooling the capital of multiple investors to purchase assets through funds. Investors pay for shares in a mutual fund, and the fund manager uses this money to invest in a diversified portfolio of assets.
- Wealth management firms: These firms provide comprehensive financial planning and investment management services to high-net-worth individuals and families. Wealth management firms typically offer customized investment portfolios, tax planning and estate planning services.
- Pension funds: These firms manage the investments of retirement plans, such as 401(k)s and pension plans. Pension funds typically have long-term investment horizons and focus on generating steady returns to meet their obligations to beneficiaries.
- Insurance companies: These firms manage the investments of insurance companies, such as life insurance and annuity contracts. Insurance companies typically have large portfolios of bonds to match their long-term liabilities.
- Exchange-Traded Fund (ETF) providers: These firms create and manage ETFs, which are investment vehicles that trade like stocks on an exchange. ETFs typically track a particular market index or sector and offer investors convenient, low-cost access to diversified portfolios.
- Real Estate Investment Trusts (REITs): These firms invest in and manage income-producing real estate properties, such as apartments, office buildings and shopping centers. REITs offer investors exposure to real estate assets and typically pay out a significant portion of their income as dividends.