What is included in Asset Management?
Asset management encompasses a range of activities aimed at maximising the value and performance of assets. While the specific scope of asset management can vary depending on the context and the types of assets involved, here are some common components typically included in asset management:
Strategic Planning: Asset management begins with strategic planning to define investment objectives, risk tolerance, time horizons, and performance benchmarks. This involves understanding our clients' financial goals and designing investment strategies to achieve them, we always provide our recommendations but this is very much client led.
Portfolio Construction: Asset managers design and construct investment portfolios tailored to clients' needs, preferences, and constraints. This includes asset allocation decisions to determine the optimal mix of asset classes (e.g., stocks, bonds, cash, real estate) based on expected returns, risk profiles, and correlation patterns. At ID Real Estate we focus purely on real estate and can sit alongside your wealth managers who will help build your stocks, bonds and cash holdings.
Investment Selection: Asset managers like ourselves research and select individual investments within the selected asset class(es) to populate and grow the portfolio. This involves analysing markets, evaluating financial metrics, assessing risk factors, and conducting due diligence to identify opportunities that align with investment objectives.
Risk Management: Asset managers implement risk management strategies to mitigate portfolio risk and preserve capital. This may involve diversification across asset classes, sectors, and geographic regions, as well as employing risk mitigation techniques such as hedging, asset-liability matching, and position sizing.
Monitoring and Rebalancing: Asset managers monitor portfolio performance regularly and rebalance asset allocations as needed to maintain alignment with investment objectives and risk targets. This involves assessing changes in market conditions, economic outlook, and individual investment fundamentals, and making adjustments to optimise portfolio composition, this may mean disposing of assets to invest funds in new opportunities.
Performance Reporting: Asset managers provide clients with regular performance reports and updates on portfolio activity, including investment returns, asset allocation breakdowns, transaction summaries, and benchmark comparisons. Transparent and accurate reporting helps clients track progress towards their financial goals and evaluate the effectiveness of asset management strategies.
Client Communication and Education: Asset managers communicate with clients regularly to provide updates on market developments, portfolio performance, and investment strategy insights. They also educate clients on investment principles, market dynamics, and long-term wealth management strategies to empower informed decision-making.
Compliance and Regulatory Oversight: Asset managers adhere to regulatory requirements and industry standards governing the management of client assets. This includes compliance with legal and fiduciary obligations, maintaining appropriate documentation and records, and ensuring transparency and fairness in all dealings with clients.
Client Service and Relationship Management: Asset managers provide personalised client service and relationship management to cultivate long-term partnerships. This involves understanding clients' needs, addressing inquiries and concerns promptly, and delivering high-quality service to build trust and loyalty.
Overall, asset management involves a comprehensive and dynamic process aimed at optimising the value and performance of assets while aligning with clients' financial goals and preferences.