85.2. Asset Management and Pooled
Investments
Financial Services - answer- Transactions
- Research
Asset Management Industry - answer Buy-Side = manage investments for clients
- Transact
- Rese
- Full Service: variety of styles and asset classes
- Specialists focus on style or asset class
- Multi-boutique: holding company for specialists
- May focus on traditional or alternative asset classes or both
Sell-Side = Investment banking and Broker-Dealer, help clients transact and sell
Active vs. Passive Mangement - answerActive: Use manager skills to attempt to
outperform benchmark (alpha)
Passive: replicate (accurate and cheap) the performance of a benchmark
- Smart Beta: focus on exposure to specific market risk factor
-- Not just based on market value alone
Notable industry trends - answer- Market share for passive management has increased
by about 20% of AUM
- Information technology investment to capitalize on "big data" (and AI)
-- social media, smart devices, GPS, images, sensors
- emergence of robo-advisors
Pooled Investments - answer
Open-end mutual funds - answer- Buy (subscribe)or redeem shares at net asset value
(NAV)
- # shares changes with purchases and redemptions
-- Will go up and price will go up if more people buy in
-- Will go down and price will go down if more people redeem
Investments
Financial Services - answer- Transactions
- Research
Asset Management Industry - answer Buy-Side = manage investments for clients
- Transact
- Rese
- Full Service: variety of styles and asset classes
- Specialists focus on style or asset class
- Multi-boutique: holding company for specialists
- May focus on traditional or alternative asset classes or both
Sell-Side = Investment banking and Broker-Dealer, help clients transact and sell
Active vs. Passive Mangement - answerActive: Use manager skills to attempt to
outperform benchmark (alpha)
Passive: replicate (accurate and cheap) the performance of a benchmark
- Smart Beta: focus on exposure to specific market risk factor
-- Not just based on market value alone
Notable industry trends - answer- Market share for passive management has increased
by about 20% of AUM
- Information technology investment to capitalize on "big data" (and AI)
-- social media, smart devices, GPS, images, sensors
- emergence of robo-advisors
Pooled Investments - answer
Open-end mutual funds - answer- Buy (subscribe)or redeem shares at net asset value
(NAV)
- # shares changes with purchases and redemptions
-- Will go up and price will go up if more people buy in
-- Will go down and price will go down if more people redeem
