what's up everyone kenji here and in this video i thought i'd explain the asset management industry
so firstly we'll look at the definition of the asset management industry
which is also known as investment management then we'll look over the types of asset classes there
are next we'll go over the career options in asset management looking at things like
the work hours the skills required as well as the compensation and lastly we'll go over the
types of companies there are out there in asset management in case you're looking to apply to some
so looking at a basic definition asset management is about managing clients as money with the goal
of growing that money so generating returns over time while at the same time mitigating risks
as for how they get compensated for this it's usually a fixed fee that's a percentage of the
assets under management so basically if a fund has a hundred million dollars under management
one percent of that so one million in this case will be their annual fixed fee some funds
also have a variable variable aspect which is basically based on performance right so if they
hit a certain target they're going to get a say variable of that which is basically like a bonus
as for who the clients of asset managers are so essentially who's investing the money
it's usually large institutions and at the same time high net worth individuals
so when it comes to institutional investors these are the likes of pension funds
sovereign funds or insurance companies all of which have one thing in common and it's that
they usually have a lot of cash they need to do something with so instead of just leaving it in
their bank say they decide to invest it through an asset manager to illustrate let's suppose you have
a car and every month you pay insurance for that car in case you crash now the insurance company is
getting this cash every month and he wants to grow it so that if you ever actually end up crashing
they can pay for that and that's why they need asset management companies to help them grow that
money now the second type of client has to do with high net worth individuals so these are extremely
well-off people like say something like 10 million plus in net worth and they're also looking to
invest their money just because they want to grow it right now if a regular person like say myself
goes in there and tries to ask for these services they're just going to reject me mainly because i
don't have enough money for it to be worth their time and at this point you might be wondering well
what's the difference between asset management and wealth management then and truthfully they're
relatively similar the main difference is that wealth management not only encompasses getting
good returns on the money but also other things like working out your retirement plans working out
your mortgage your taxes and so on so it does focus on more aspects of your financial life
as opposed to just getting better returns free all right so once an asset management company has all
the money from their clients where do they invest it enter the different asset classes and broadly
speaking there's around four main ones stocks bonds commodities and alternative investments
when it comes to stocks it ranges from blue chip companies which are the biggest in the world
think of apple google amazon and so on to small cap companies so smaller in size all the way to
gross stocks like those from emerging countries say secondly we have bonds and these can range
from corporate bonds so those issued by companies like for example apple issued 14 billion worth of
bonds and on the other hand they can be government bonds so for instance in the us the u.s government
bonds would be one but they can also be issued by a specific state or a specific city as well
now thirdly we have commodities and these are essentially raw materials that are very
popular so for instance it could be gold it could be silver could be oil coffee and so
on the list is actually quite long here and then lastly there's alternative investments
and these are the likes of hedge funds venture capital private equity and so on if you want
to go all the way to the extremes even artwork is sold as an alternative investment as well
when it comes to careers in the asset management industry broadly speaking there's three main
categories the first one has to do with the investment team and within it there's actually
around three different roles the first one has to do with the portfolio manager then you have the
research analyst and you also have a trader so a portfolio manager is essentially the decision
maker so he he or she is in charge of making sure you hit the right return targets and the
right risk metrics secondly you have the research analyst and this is a person that's in charge of
generating the ideas coming up with different ideas and seeing what's going on in the market
and once they have the ideas they're going to pitch them to the portfolio manager
who's going to be there the person above them and then lastly you have a trader
and a trader is essentially executing the trades on behalf of the portfolio manager's wishes
it's not so common to be generating your own ideas as a trader now because these asset management
companies are so large and they have offices all around the world usually an investment
team ends up specializing in a particular region and in a particular asset class so for example it
could be a team specialized on on us government bonds it could be another team specialized on
german blue chip stocks for instance the next big category i'd call client oriented so these are
the likes of sales people relationship managers fm managers and so on and their primary goal here is
to attract new people so attract new investors to come and invest in this asset management company
and at the same time keeping the ones that are currently there happy so if they ever have
any questions or anything like that it's them that they would attend to and the last big category you
have here is a support team and in short these are making sure that the other two categories
are able to do their work smoothly so think of the legal team think of hr compliance and so on
now out of these three the investment team is definitely the most prestigious but all three
of them are essential right if one of them were to disappear the other two would just not be able
to do their job well now when it comes to the work hours asset management is not like investor
banking or management consulting where you can be in there for 16 hour days so 80 hours a week
80 hours a week right it's typically for the investment team which is usually the one that
works the most it's around 12 hours a day so 60 hours a week when it comes to the client oriented
side so the sales team for instance i'd say around 50 hours a week is normal and lastly when it comes
to the support side i'd say around 40 to 45 hours a week is what you should expect when it comes to
salaries in a big u.s city like what might be new york or san francisco those in the investment team
can be earning anywhere from seventy to eighty thousand dollars and that could increase to around
six figures with the bonus when it comes to the sales side it's obviously going to be less and
the same goes for the support side but you also gotta keep in mind that these sides are working
less hours too lastly looking at the skills required for the investment side spreadsheets
are probably going to be your best friend alongside research and good analytical skills
secondly for the client oriented side as you can probably imagine it's more about communication
interpersonal skills and a good ability to sell for the support functions i'm not really gonna
list out the different skills mainly because someone that works on the tech side of support
versus the legal side of support is obviously going to have very different kind of skill sets
when it comes to types of companies there's actually a split between those that are pure play
and those that are divisions within an investment and what i mean by pure play is that it's their
core business model to do asset management and these are the likes of say fidelity vanguard
or blackrock are among the biggest ones and they typically have assets under management well above
the one trillion dollar mark that's right one trillion so that's a one followed by 12 zeros
on the other hand there's the asset management division within an investment bank so investments
actually have a lot of different client-facing divisions like what might be investment sales and
trading research and obviously asset management and it is an important part of their business but
it's not their only part that's why they're not regarded as pure play asset managers
now some examples of the big investments out there include jp morgan goldman sachs and ubs
all of which have a big asset management side as well so that's an overview of the asset management
industry i am considering making a similar video to do with private equity if this one does well
so make sure you hit that like and subscribe and let me know in the comments if you'd be
interested in that that's all for this one and i'll hopefully catch you in the next
you