Candlestick Trading Blog
May 26, 2008
Investment Manager
Investment managers are professional managers of an individual or of a company’s financial assets. Their job is to make investments on behalf of people, institutions, or pension funds by assessing each client’s individual needs and investment risk profile. Investment managers perform asset management or investment management, depending on who they are representing, but they basically do the same thing. Investment firms are paid to perform asset allocation in attempts to outperform specific benchmarks. They perform asset allocation by understanding the different asset classes available and then by allocating funds among these assets. Managed investment funds are designed to offer the potential for high returns and portfolio diversification. While investment management has existed since the early 1900’s, it really grew from the Social Security solvency issues in the 1970’s. Due to increased attention to retirement planning, the Employment Retirement Income Security Act (ERISA) was passed to create 401k private retirement plans. It was then that investment managers began to specialize in managing money for institutions and individuals. Investment managers assist institutions and individuals in diversifying their portfolios. Effective diversification requires portfolio management. It is through this process that each manager looks at the degree of diversification that makes sense for a given client, and they then develop a list of planned holdings in accordance with the degree of diversification. This list is used to determine the percentage of each fund that should be invested in each stock or bond. There are benefits to utilizing an investment manager to help manager your investment options. The most important benefit it that they assist investors in investing in areas in which they would never have thought about themselves. Perhaps the greatest advantage is that it also provides a sense of comfort to the investor to know that their funds are being handled by a professional. Investment managers have really good contacts with people outside of their firm which can provide them access to more information and potential investment ideas. This can help them to make timely decisions as well for the investor who otherwise may not have the knowledge. You have to of course trust this professional and therefore must do your own research to ensure that you are happy with the investment firm you have chosen. There are many ways you can do this. You can look to fellow investors for referrals, join investment clubs, or join online forums to gain feedback from a larger group of people. They may be able to point you in the right direction when choosing an investment manager. You must however, make the final determination. When selecting an investment manager there are certain things that you should look for and there are certain things that you should avoid. You should look for independent investment management firms because they have fewer conflicts of interest. You should look for portfolio managers that are accessible. This will come in handy when the financial markets are volatile. You also want to choose a firm that in conservative in their investing strategy. Excessive risk taking can have a negative impact on your portfolio. Some things to avoid when choosing an investment manager are those investment advisobrs with little academic and analytical experience. You should also stay away from accountants who offer investment services. They tend to have a somewhat limited investment experience. Lastly you should stay away from any investment manager who guarantees you a return on investment. There are no guarantees! Online Stock Market Reviews presented live via the internet by Stephen Bigalow |
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