Investment Management

What is Investment Management?

Investment management is the process of making decisions about investments. It involves researching,
selecting, and monitoring a portfolio of assets that match an investor’s goals, risk profile, and timeframes.
Investment management encompasses a wide range of investment opportunities for individuals or
institutions looking to grow their wealth from stocks and bonds to real estate and other asset classes.

By taking into account various factors such as liquidity, market conditions, tax implications, and more,
investment managers provide expert advice on managing your investments for maximum returns.
Whether you are an individual investor or an institution seeking a professional advisor, investment
management can help you make the most of your money today – and tomorrow.

Moreover, you should be aware that success in investment management comes with inherent risks, and
you should always consult a qualified professional before making any financial decisions.

Investment Management Objectives

It involves creating a portfolio of investments that generate returns while minimising risk. Other than this,
there are various objectives such as

1. Assess and manage risk

Investment managers must assess the amount of risk they’re willing to take and how to manage it on an
ongoing basis.

2. Establish goals

An investment manager will help you determine your financial objectives and create a strategy to reach
them.

3. Select investments

With a deep understanding of different asset classes, the manager will choose appropriate investments for
the investor’s needs.

4. Monitor progress

The manager will track market conditions and adjust the portfolio accordingly to maximise returns while
mitigating risks when necessary.
5. Maximise returns

Through careful portfolio management, investment managers strive to maximise gains while minimising
losses over time, with attention given to tax efficiency and liquidity.

How Does Investment Management Work?

It is important to know how investment management works. This can be crucial in helping you make
informed decisions when it comes to investing and managing your finances:

 Establish Investment Goals

Before taking the plunge and investing, it is essential to define your personal investment goals and
objectives. You should consider elements like the level of risk you are willing to bear, what kind of
returns you would be content with, for how long you intend to be an investor, and any moral
considerations that could affect your decisions.

 Establish a Plan

After you have identified your investment goals, decide on the strategy that fits best for you. You can
choose between active or passive management options depending on how much effort and time you want
to put into the process. Active managers opt for individual stocks based on their research to outperform
market returns, while passive investors invest in index funds pursuing only traditional market indices
movements.

 Uncover and Choose Your Investments

After deciding on your strategy, you will need to research the most suitable investments for your
portfolio. If you’re an active investor, this means studying individual stocks or other securities to identify
potential investment options. You should consider factors such as a company’s financials, industry trends,
and competition when making your decision. For passive investors who prefer index funds, selecting
those that align with your goals is essential to maximise returns down the line.

 Track Your Portfolio

After you’ve chosen your investments, it’s essential to observe them closely. This involves staying
informed about the markets and keeping up with any news that may influence their value.

 Rebalance Your Portfolio

Periodically, you should look at how your investments have performed over time and determine if any
rebalancing needs to be done. This means adjusting the mix of assets in your portfolio to stay aligned with
your goals and objectives. Rebalancing may also help reduce risk and ensure that you take advantage of
any market opportunities.
  Stay Informed

The final step in successful investment management is staying informed and up-to-date on the markets.
This means reading market news, staying abreast of any changes to tax laws, and understanding how
economic events may affect your investments. By staying informed, you can make better decisions about
when to buy and sell assets to maximise your returns.

Types of Investment Management

Investment management can take many different forms and vary based on the type of asset being
managed such as

1. Traditional Investment

This is the most basic form of investing, in which a portfolio manager invests in stocks, bonds, and other
assets according to an investor’s goals.

2. Hedge Fund Investing

Hedge funds are investment vehicles that use alternative strategies such as leveraging debt and using
derivatives to maximise returns.

3. Private Equity Investing

Private equity investments involve buying stakes in private companies that may not be publicly traded on
stock exchanges.

4. Real Estate Investing

It involves purchasing properties to generate rental income or capital appreciation over time.

5. Mutual Fund Investing

Mutual funds are investment vehicles that pool money from many investors and invest in a wide range of
assets.

6. Portfolio Management

This umbrella term encompasses all the other forms of investment management, where portfolio
managers oversee the entire investment process, from selecting investments to monitoring performance
and taking action when necessary.

7. Quantitative Investing
This type of investing involves creating algorithms or models to identify trends and uncover potential
market trading opportunities based on sophisticated data analysis techniques.

8. Cryptocurrency Investing

This type involves buying and selling digital currencies, such as Bitcoin and Ethereum, to capitalise on
price fluctuations in a highly volatile market.

Types of Investment Managers

Investment managers are key people in managing your money, growing it and returning it to you as safely

as possible. They work under tremendous risk and invest your money keeping in view your financial

objectives and your risk appetite. However, all investments have one objective in common-to grow your

money. The aspired quantum of growth may vary depending on the risk appetite.

Some of the common avatars of investment managers:

a) Fund Manager:

A fund manager manages your money and allocates them amongst stocks, bonds and g-secs.
b) Portfolio Manager:

A portfolio manager would manage multiple funds that have objectives of their own.
c) Financial Advisor:

A financial advisor provides expert tips on investing your money. A financial advisor has information on
returns, costs and terms for various financial investment avenues available in the market.

Pandey, N. (2023, December 15). What is Investment Management? Types, Career, And How It
works? Emeritus India. https://emeritus.org/in/learn/finance-investment-management/

What is Investment Management? (2022, August 30). https://www.canarahsbclife.com/blog/financial-