Asset management remains one of the main concerns of companies globally. This is because businesses are propelled by assets. To function effectively, companies today rely heavily on physical assets. The asset management process also helps companies in maximizing the value of their assets and achieve their business goals. This article guides you through asset management groups and company stocks.
What Is Asset Management?
The process of planning and controlling the acquisition, operation, maintenance, renewal, and disposal of organizational assets is known as asset management. This process improves asset delivery potential while minimizing costs and risks. Also, adequate maintenance and the proper deployment of systems, people, and processes ensure that capital is improved over the asset lifecycle.
Types of Asset Management
Below are the types of asset management
#1. Financial Asset Management
A financial advisor is a professional that can make investment suggestions to clients and buy and sell assets on their behalf. Likewise, while financial advisors may or may not have a legal obligation to their clients, always inquire first. Many financial advisors focus on a particular area, such as tax law or estate planning.
#2. Physical Asset Management
This stands for the process of handling fixed asset management, inventory management, infrastructure management, as well as public asset management.
The most affordable type of investment manager isn’t even a person. A Robo-advisor is a computer algorithm that automatically monitors and rebalances an investor’s assets. Similarly, it sells and buys investments based on pre-programmed goals and risk tolerances. Because there is no human intervention, Robo-advisors are much less expensive than personalized investment services.
The Importance of Asset Management
Many companies fear how much productivity they will lose if they do not update how they track and manage their assets. Asset management entails more than simply counting pieces of equipment and entering them into an Excel spreadsheet. Knowing more in-depth and detailed data about an asset’s value over its entire lifecycle equally helps companies of all sizes save money per asset and enables companies to get the most out of each asset.
You avoid costly problems and instances of duplicate purchases or last-minute maintenance needs by knowing exactly where your assets are at all times, who has them, and their condition. And having that data available to employees around the clock, no matter where they are, improves accountability and efficiency.
Developing a Strategic Asset Management
Below are the strategic plans a firm owner needs to develop
#1. Complete an Asset Inventory
An owner must keep track of all the assets he owns. He will not be able to manage his assets effectively if he is unaware of the exact number of assets in his inventory. When creating an inventory of company assets, include the following information: total asset count, where the assets are located, the value of each asset, when the assets were acquired, and the expected life cycle of the assets.
#2. Compute Life Cycle Costs
If a business owner wants to be correct with his asset management plan, he should calculate the total life-cycle cost of each asset, because many business owners make the error of only calculating the initial purchase costs. Additional costs, such as maintenance, condition and performance modeling, and disposal costs, are likely to arise during the asset’s life cycle.
#3. Set Levels of Service
After estimating the life-cycle costs, the next step is to figure out service levels. Simply put, it means outlining the overall quality, capacity, and role of the various services that the assets provide. The owner of a company can then determine the operating, maintenance, and renewal activities required to keep the assets in good condition.
#4. Exercise Long-Term Financial Planning
A firm owner’s asset management process should ideally translate easily into long-term financial plans. Also, with a solid financial plan in place, the owner can determine which goals are achievable and which must be prioritized.
Asset Management Company Stocks
The best company asset management stocks are determined by your investment management and investment goals; while variability may be ideal for day traders, long-term investors will prefer stocks with more coherent gains over time. Before you invest in the asset management industry, learn more about the company and how its stocks have historically performed. Remember that a stock’s past performance does not guarantee that it will continue to rise in the future. Asset management company stocks include the following:
#1. Affiliated Managers Group
Affiliated Managers Group, Inc., through its affiliates, operates as an asset management firm in the United States, providing investment management services such as mutual funds, institutional clients, and high-net-worth individuals. It also provides mutual funds with advisory or sub-advisory services. Affiliated Managers Group stock opened the day at $164.99, up from $164.83 the previous day. The most recent price was $164.51. (25-minute delay). Moreover, Affiliated Managers Group is an NYSE-listed company with a trailing 12-month revenue of approximately USD 2.5 billion and a workforce of 4,050 people.
- Market capitalization: $4,420,130,304
- P/E ratio: 8.7665
- PEG ratio: 0.6145
#2. Ameriprise Financial, One of the Asset Management Company Stocks
Ameriprise Financial, Inc., through its subsidiaries, offers a wide range of financial products and services to individuals and institutions in the United States and around the world. Equally, its business is divided into four divisions: Advice & Wealth Management, Asset Management, Retirement & Protection Solutions, and Corporate & Other.
Ameriprise Financial opened the day at $253.46 after closing the previous day at $252.52. The most recent price was $253.37. (25-minute delay). In addition, Ameriprise Financial is an NYSE-listed company with a trailing 12-month revenue of around USD$13.8 billion and 12,000 employees.
- Market capitalization: $27,837,599,744
- P/E ratio: 9.2876
- PEG ratio: 1.0861
#3. Bank of New York Mellon
The Bank of New York Mellon Corporation offers a variety of financial products and services both in the United States and around the world. Securities Services, Market and Wealth Services, Investment, Wealth Management, and others are the business segments of the company. Equally, custody, trust and depositary services, accounting, exchange-traded funds, middle-office solutions, transfer agency, services for private equity and real estate funds, foreign exchange, securities lending, liquidity and lending services, prime brokerage, and data analytics are all available through the Securities Services segment.
The stock of Bank of New York Mellon opened the day at $39.14, up from a previous close of $38.94. The most recent price was $39.01. (25-minute delay). The Bank of New York Mellon is also an NYSE-listed company with a trailing 12-month revenue of around USD$16.2 billion and a workforce of 50,800 people.
- Market capitalization: $32,461,494,272
- P/E ratio: 10.2474
- PEG ratio: 0.9164
#4. Janus Henderson Group (JHG)
Janus Henderson Group plc is a holding company for asset management. The firm also offers services to institutional, retail, and high-net-worth clients through its subsidiaries. It also manages client-specific equity and fixed-income portfolios. Janus Henderson Group stock opened the day at $41.85, up from $41.50 the previous day. The most recent price was $42.00. (25-minute delay). Moreover, Janus Henderson Group is an NYSE-listed company with a trailing 12-month revenue of approximately USD$2.6 billion and a workforce of approximately 2,000 people.
- Market capitalization: $3,616,314,112
- P/E ratio: 7.4
- PEG ratio: 1.21
#5. Fidus Investment (FDUS), One of the Asset Management Company Stocks
Fidus Investment Corporation is a company that specializes in business development. It also specializes in leveraged buyouts, bank repossessions, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans.
It does not invest in distressed or turnaround situations. Fidus Investment stock opened the day at $17.13, up from $16.97 the previous day. The most recent price was $17.23 (25-minute delay). Fidus Investment is also a NASDAQ-listed company with a trailing 12-month revenue of approximately USD$87 million.
- Market capitalization: $420,078,912
- P/E ratio: 4.2761
- PEG ratio: 3.59
Asset Management Companies
Asset management companies (AMCs) invest pooled funds from clients, putting the capital to work through different investments. Similarly, asset management companies are referred to as money managers or money management firms. Such businesses include Vanguard Group, Fidelity Investments, T. Rowe Price, and many others.
Individual investors lack the expertise and resources to produce strong investment returns over time. Similarly, asset management companies are usually groups of investment professionals with broad market expertise. With a large amount of pooled capital, they are also able to utilize diversification and complex investment strategies to generate returns for investors.
The Importance of an Asset Management Company
Below is the importance of asset management companies.
#1. Economies of Scale
Economies of scale are the cost advantages that a company can gain by increasing its operational scale. The operating costs per unit are lower in larger operations. Asset management companies, for example, can buy securities in larger amounts and negotiate lower trading commission rates. They can also invest a large amount of capital in a single office, which reduces overhead costs.
#2. Access to Broad Asset Classes
Access to diverse asset classes allows asset management firms to invest in asset classes that an individual investor would not be able to do. An AMC, for example, can invest in multibillion-dollar infrastructure projects like a power plant or a bridge. Because the investments are so large, an individual investor is unlikely to be able to access them.
#3. Specialized Expertise
Asset management firms with specialized expertise hire finance professionals with extensive experience in managing investments, which most individual investors lack. An AMC, for example, can hire a variety of professionals who specialize in specific asset classes, such as real estate, fixed income, sector-specific equities, and so on.
Disadvantages of an Asset Management Company
The downsides of an asset company are below
#1. Management Cost
Most asset managers charge flat fees that are collected regardless of their performance. As a result, fees can become prohibitively expensive for investors over time. Because of the costs of the resources and expertise required to run an AMC, the fees are high in order to compensate for such costs while also providing a profit to asset managers.
Asset managers can grow too large, becoming cumbersome and unresponsive to the volatile market. Managing an excessive amount of capital can also cause operational issues at times.
#3. Risk of Underperforming
AMC performance is typically measured in relation to a benchmark. A benchmark is a standard against which performance is measured, typically in the form of a broad market index. There is a risk that asset managers will underperform the markets, which, when combined with the management fees mentioned earlier, can be very costly for investors.
Asset Management Groups
The top 10 asset management groups are listed below
AUM: $9.464 trillion
BlackRock is not only the largest asset manager in the world but also one of the world’s largest financial institutions. The corporation was established in 1988 and went public in 1999. Through its iShares products, the company has also been instrumental in advancing the growth of exchange-traded funds (ETFs). In 2021, iShares accounted for more than a quarter of BlackRock’s assets under management.
#2. The Vanguard Group
AUM: $8.4 trillion
Vanguard is well-known for its passive investing strategy. This means that money is invested in mutual funds designed to replicate the performance of a specific index or the overall stock market. Similarly, Vanguard touts low expense ratios for the majority of its funds. Vanguard also provides brokerage services, financial planning, pensions, and other services in addition to asset management.
#3. UBS Group, One of the Asset Management Groups
AUM: $4.432 trillion
UBS Group operates four divisions around the world. The Swiss firm bills itself as the “only truly global wealth manager.” UBS provides wealth management as well as asset management services.
#4. Fidelity, One of the Asset Management Groups
AUM: $4.23 trillion
Fidelity Investments is an asset manager and discount broker with over 30 million customers as of the third quarter of 2021. Individual investors can buy and sell securities through its online platform. Fidelity also manages clients’ entire portfolios. It made headlines in the summer of 2018 when it began offering mutual funds with no expense ratios and no minimum investment requirement.
#5. State Street Global Advisor
AUM: $3.86 trillion
Boston-based State Street is a division of the State Street Corporation. Moreover, this company manages investments for a diverse group of institutional clients, including non-profits, local governments, associations, and educational organizations.
#6. Morgan Stanley
AUM: $3.274 trillion
Morgan Stanley was founded on Wall Street in 1935 by partners and employees of J.P. Morgan and Drexel. It had approximately 68,000 employees in 39 countries when it acquired the investment platform E*TRADE in late 2020.
#7. JPMorgan Chase
AUM: $2.996 trillion
JPMorgan Chase is best known as an investment bank, but it also has a thriving asset management group. As part of a new custody arrangement, it received $1.3 trillion in assets from BlackRock in 2017.
#8. Allianz Asset Management Groups
AUM: $2.953 trillion
This German company’s main business is insurance. Likewise, Allianz Global Investors and PIMCO are its asset management groups. In addition, as of October 2021, Global Investors and PIMCO jointly manage approximately $2.17 trillion in third-party assets.
#9. Capital Asset Management Groups
AUM: $2.6 trillion
Capital Asset Management Group was founded in Los Angeles in 1931. In addition, as of February 2022, it had over 7,800 associates working in 29 offices around the world.
#10. Goldman Sachs
AUM: $2.372 trillion
Asset management is just one of many services offered by Goldman Sachs. They also offer services such as hedge funds, banks and brokerages, pensions, endowment and foundations, and corporations.
In conclusion, many companies fear how much productivity they will lose if they do not update how they track and manage their assets. However, knowing more in-depth and detailed data about an asset’s value over its entire lifecycle helps companies save money per asset, and having that data available to employees improves accountability and efficiency.
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FAQs on Asset Management
What does asset management companies do?
An asset management company (AMC) is a company that invests client funds in a variety of investments such as stocks, bonds, real estate, master limited partnerships, and others.
What is meant by asset management?
The practice of increasing total wealth over time by acquiring, maintaining, as well as trading investments with the potential to grow is known as asset management. Equally, this service is provided by asset management professionals for others.
What are the goals of asset management?
The goal of any asset management process is to use a wide approach to improve operations and also make the organization more effective by taking into account the entire asset investment and life cycle.