Asset Management – What Is It And Why Do You Need It?

management

Asset Management – What Is It And Why Do You Need It?



More than USD100 trillion is managed by asset managers worldwide. The biggest market is the USA with a share of about 60% followed by Europe with over 30% and the balance share is held by Asia.

Nonetheless, Asia’s growth rate of around 24% over the past 5 years is twice that of the USA and Europe, at 10% per annum. The potential for the Asian market is huge and it is growing stronger by the year.

The asset management industry is characterized by a strong global market concentration. While more than 4,200 companies operate in this sector in Europe alone, the 400 largest companies worldwide hold more than 80% of all assets under management.

So what does this mean? There is no better time to consider what asset management firms can offer.

What Is Asset Management?

Asset management is the process of acquisition, maintenance, operation, renewal/disposal of a company’s assets. Having a well-planned asset management strategy in place includes improvement of the delivery potential of all assets as well as minimizing the risks. 

It also includes the deployment of resources and creating processes for the enhancement of value over the asset’s lifecycle. 

Asset lifecycle

There are various stages (from acquisition to disposal) that an organisation’s asset passes through during the entire span of its ownership. This period when an organisation owns the asset and can utilize it for its business goals is known as Asset lifecycle. 

Types Of Asset Management

The process of asset management varies from one organization to another. However, there are three broad classifications involved:

  • Physical Asset Management- handling fixed assets, inventory management, public assets, infrastructure, etc. 
  • Financial Asset Management- management of processes like procurement, budgeting and costs, cash, stocks, bonds, or, creating new investment strategies.

Contractual compliance- reviewing and managing processes like digital asset management, IT asset management, contractual requirements, etc.

What Does An Asset Management Company Do?

The firm professionally manages the financial portfolio of its clients. Such firms typically have investment minimums, so their clientele are usually institutions, individuals or families of high net worth.

Empowered to invest on behalf of its clients, an asset management firm’s ultimate goal is to multiply and maximise financial returns for clients while helping them mitigate risks.

It also offers investment services along with a wide range of traditional and alternative product offerings that might not be available to the average investor.

Among the non-exhaustive list are:

  • Mutual funds
  • Private investment funds
  • Insights and ideas from research on equity, fixed income, currency, commodity markets, economics, portfolio strategy, derivatives and credit issues
  • Stocks, bonds, convertibles, alternative assets (such as hedge funds, private equity funds and real estate), commodities, indexes of each of these asset classes and money market investments
  • Investment opportunities include government financing through sovereign bonds, private sector financing through equity or bond purchases, and financing infrastructure needs

Asset managers in an asset management firm in Singapore will conduct research, interviews, as well as statistical analyses of companies, markets and trends, in order to determine what investments to make or avoid on behalf of their clients.

Why Should You Be Concerned About Asset Management?

Most professionals and wealthy people do not have specialized knowledge of the capital markets. By engaging an asset investment firm, you or your organisation can benefit from full-time professional money management.

Asset investment firms in Singapore are armed with specialist know-how of the whole repertoire of investment tools which an individual or institution can avail of. They may also have first-hand information of certain stocks or upcoming market trends.

Such services and intel are only privy to clients of an asset investment firm. Being in the know will help you have a strong foothold in terms of financial gains and security.

Benefits Of Engaging An Asset Management Firm

  1. Diversification

Asset management firms have access to thousands of different securities and have the knowledge to make appropriate choices for their clients. They are able to diversify on behalf of their clients.

Diversification means spreading out investment risk by investing in many different securities, rather than concentrating investments in one or two. A diversified portfolio is generally less volatile than a concentrated one.

  1. Round The Clock Monitoring

On-going monitoring is an important service of asset management firms. They keep track of all their clients’ accounts throughout every business day. This is vital in today’s volatile global economy.

  1. Risk Management

The professionals in asset management firms are trained to identify risks in various investment products as well as risks posed by changing market trends.

  1. Power Of Pooled Capital

A pooled capital consists of a gathering of funds from several clients. This allows clients to benefit from economies of scale.

A larger pool of funds can make new investment opportunities that were not initially available to them as an individual investor. For example, collectively they are able to purchase more shares than they can as an individual investor with less amount of money.

This pooled capital in a single account also enables investors to create a diverse portfolio. A diverse portfolio allows investors to reap the benefits from different sources of investment.

What Are The Common Asset Management Services In Singapore?

Some firms only cater to wealthy clients through private accounts known as individually managed accounts, or with hedge funds. Some firms combine service offerings for both wealthy clients and investors with more average-sized portfolios.

Each asset management firmin Singapore has its area of specialization.

Some are generalists. These are usually large companies that design financial services or products they think investors will want and need.

Some firms have a specialized focus, concentrating on one or a handful of areas, such as niche asset classes or in value investing.

Others focus exclusively on launching mutual funds while some build their practice around managing money for institutions or retirement plans, such as corporate pension plans.

Finally, there are those that provide services to specific firms, such as managing assets for a property and casualty insurance company.

Conclusion: Should You Consider Investing With An Asset Management Firm In Singapore?

With Singapore’s well-thought-out laws which encourage foreign exchange and allow more fluid financial transactions across borders, this constitutes a golden formula for multiplying wealth.

Singapore is one of the most attractive markets to invest in among investors and financiers around the world due to the ease of doing business as well as political stability in the country.

It is no surprise that Singapore continues to attract investments and maintains its position as one of the world’s best financial hub.

How Can Salzworth Asset Management Help You?

Salzworth Asset Management specializes in the Alternative Investment space to bring safe and quality alpha returns to our clients.

Founded by veterans of the industry in 2019, Salzworth Asset Management Pte Ltd (“Salzworth”) is a Registered Fund Management Company (RFMC) regulated by the Monetary Authority of Singapore (MAS).

Salzworth serves a select group of Family Offices and Multi Family Offices from Asia and maintains close relationships with Financial Institutions such as banks, insurance companies, fund management companies, pension and endowment funds, providing our clients with unique investment opportunities, in-house transaction execution capabilities and bespoke asset management services.

Our vision is to be our clients’ most trusted and professional asset management company by providing bespoke solutions customised to their financial needs and objectives.

We rely on our experience, extensive networks, investment discipline and a keen eye for opportunity in a dynamic world transformed by technological innovation and disruption to bring our clients unique investment opportunities worth their salt.

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Science Direct. Asset Management (Online) Available at:  https://www.sciencedirect.com/topics/social-sciences/asset-management  (David P. Stowell, in An Introduction to Investment Banks, Hedge Funds, and Private Equity, 2010) (David P. Stowell, in Investment Banks, Hedge Funds, and Private Equity (Third Edition), 2018) [Accessed on 23 July 2020]

Study.com. Asset Management: Definition, Services & Examples. (Online) Available at: https://study.com/academy/lesson/asset-management-definition-services-examples.html  [Accessed on 23 July 2020]

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Statista. 9 March 2020. Number of millionaires in Singapore from 2014 to 2019, with a forecast for 2024 (Online) Available at:  https://www.statista.com/statistics/785044/singapore-number-of-millionaires/  [Accessed on 23 July 2020]

InsuranceBusinessAsia. 21 Sep 2019. Singapore retains spot as world’s fourth-best financial hub  (Online) Available at:  https://www.insurancebusinessmag.com/asia/news/breaking-news/singapore-retains-spot-as-worlds-fourthbest-financial-hub-178520.aspx  [Accessed on 23 July 2020]

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Haruhito Imakoji

<strong>Co-Founder, Chief Executive Officer</strong> <br /><br /> Haruhito was the Executive Director of Marcuard Heritage Singapore Pte Ltd, a Swiss multi family office. He was instrumental in building up their European and Asian clientele base which comprised of a global network of asset managers, distribution partners, and legal & tax specialists. Prior to that, he held various positions for 10 years in Deutsche Bank where he gained extensive experience in various Asian markets. <br /><br /> Haruhito has been accredited as a Trust and Estate Practitioner (TEP) by STEP, and as a Financial Industry Certified Professional (FICP) by Singapore’s Institute of Banking and Finance. His vision for Salzworth is to steer it to establish multi-asset class portfolios and funds that seek to achieve steady returns for investors. <br /><br /> <a href="https://salzworth.com/our-team#haruhito" target="_blank" rel="noopener">More information about Haruhito Imakoji</a>