Here you will learn all about how asset management works, such as what it is and what types of asset management exist. 

What is asset management?

Asset management is when you let an investment professional, such as a bank or a fund management company, invest your money on your behalf. Asset management is best suited to people who don't have the time and knowledge to invest professionally. 

The main objective of asset management is for the investment manager to ensure that the client's capital grows as much as possible. 

What types of asset management are there? 

There are essentially two different asset managements, which are: 

• Discretionary managementwhich means that the trustee has a power of attorney that allows the trustee to invest how it wants without talking to the client first. 
• Advisory management, which means that the asset manager gives advice and tips, but it is always the client who decides what to invest in. 

There are also broadly speaking two types of risk-taking, which are: 

• Passive management, where the manager focuses on ensuring your investments track market indices, for example by investing in index funds. Passive management often has low fees because the investments do not require more active management. 
• Active management, where the asset manager makes every effort to maximize returns at the expense of an increased risk of loss. But constantly trying to identify and buy up stocks that are likely to increase in value requires a high level of commitment from the manager, so active management is usually a little more expensive than passive management. 

Which asset management should you choose?

It mainly depends on how involved you want to be, how much you are willing to pay in fees and what risk you want to take. 

If you don't want to be particularly involved in your investments, you should opt for discretionary management, while advisory management is more suitable if you want to have full control over your investments. 

Passive management is best suited to those who want low risk and low fees, while active management is better suited to people who are willing to take risks to maximize returns, while agreeing to pay a slightly higher fee to the manager for doing so. 

What are the advantages and disadvantages of asset management?

Benefits and advantages

Examples of the benefits of asset management are 

• You save time by not having to familiarize yourself with how the investment market works and what opportunities are available. 
• You will be assisted by a manager who is an expert in making good investments and has a high level of knowledge about how the market works. The manager is also an expert in identifying good investment opportunities. 
• You get a complete investment solution that suits your preferences in terms of risk-taking, personal involvement and management fees, among other things. 
• You will be helped to create a balanced investment portfolio with diversified risks, if that is what you want. 

Disadvantages

Examples of disadvantages of asset management are that: 

• You will need to pay a management fee which is often between 0.5-2 % per year. The more actively the manager invests, the higher the fee is normally. 
• You are not guaranteed a good return just because you use an asset manager. If the market fluctuates in a way that the manager did not foresee, you may lose all or part of the amount you invested. 

Who is asset management suitable for?

Some typical target groups in asset management are: 

• Investors with a lot of capital who want help optimizing returns without having to read up on how the market works and what investment opportunities are available. 
• Companies and organizations that do not have the knowledge or time to invest their capital effectively. 

Frequently asked questions

Below we answer frequently asked questions about asset management,

What does asset management cost?

It is common for asset management to cost around 0.5-2 % of the invested capital per year. 

Is asset management suitable for small savers?

No, asset management is not normally suitable for small savers as usually a minimum investment of SEK 500,000 is required to acquire asset management. What do asset managers invest in?

Asset managers invest, among other things, in shares, funds, bonds and/or real estate.