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asset management

Contributor(s): Matthew Haughn

Asset management is a financial service offered by professional firms for the holding, transferring, buying and selling of different types of cash and investments.

Asset management is performed by asset management companies (AMC) to maximize efficiency of cash transactions and the profitability of investments. Efficiency can be attributed to experienced employees of asset management companies, their specialization in the field and the pooled resources of numerous clients. Finance follows other management trends like enterprise asset management, IT asset management and digital asset management.

Since specialized firms take care of investments, companies can have experienced investors who know companies, markets and make more effective choices. The asset management firm knows what to buy and sell and when to do it for better profitability. The firms spend effort on market analysis, studying trends, running profitability analysis and making predictions. The companies generally operate by way of transaction fees or commissions on trades.

AMCs are much like brokerage houses, except they are more able to be selective with clients and are also held to a higher standard of law. Where brokerage houses are not responsible for losses on investments as they made their best effort, an AMC may be legally liable for their management.

This was last updated in July 2019

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