ASSET MANAGEMENT INDUSTRY-OVERVIEW Asset management refers to the system where management of both tangible and intangible assets

of an entity or group such as stocks, bonds, real estate, intellectual property and goodwill etc. Asset management is a systematic process of operating, maintaining, and upgrading assets cost-effectively. The core attraction of asset management is the usefulness of its tools in diversifying portfolios, offering more investment choices and increasing the savings base. Asset management could be classified into various forms (including but not limited to):
    

Financial Asset Management; Real Estate Asset/Property Asset Management; Intellectual Property (IP) and Licensing Asset Management; Enterprise Asset Management; Infrastructure Asset Management; etc.

Generally, it refers to the business model of financial services firms that make money from investing or trading in shares, bonds, and other securities to cater to the investment objectives of their corporate clients or high net worth individuals. The company invests on behalf of its clients and often gives clients alternative investment options that are not available to the average investor. Asset management and retail brokerage firms are in the business of using money to make more of it. These companies manage the money of their clients to achieve specific financial objectives within guidelines under which the investment pool is organized. The pool might take the form of a mutual fund, hedge fund, retirement or pension fund, or other institutional fund and, depending on how the fund is organized, could invest in any range of investment vehicles including equities, fixed-income securities, and derivative products such as options and futures. Basic Functioning of Asset Management Firms: Typically, the investor meets with an asset management team before surrendering control of the assets to discuss goals and investment styles. In general, the team works with the investor to set realistic goals to grow the investor's wealth and measure the performance of the team. The investor also usually expresses directions as to what type of investment style he would prefer the team to engage in. For example, single young investors sometimes choose less conservative investment schemes than older individuals or couples. Meetings with the asset management team are held on a regular basis so that the investor can be apprised of progress and kept up to date. Typically, once funds are surrendered to an asset management team, the team has a great deal of leeway with them. This flexibility allows team members to make rapid investing decisions without constantly consulting the holder of the funds, who remains confident that the overall return on the investments will remain high. By putting funds under management, the investor has access to hundreds of years of combined investing experience, along with special services that only an investment bank can offer. This results in a higher return on the assets than could be achieved conventionally. The best way to get a large return on assets is to diversify them. For this reason, assets are rarely pooled in one location alone, such as stocks, bonds, real estate, or mutual funds. The asset management team decides how to distribute assets, and may move money from one location to another to take advantage of a strong market. The team also provides long term investing advice based on market projections, and may assist the investor with purchasing real estate and general wealth management. Income from the

assets is typically deposited into an account at the same bank, so that the investor's financial business is concentrated in one financial institution, rather than scattered, making it easy to see the whole picture.

Asset Management Industry in India:

India s unique demographic and geographic characteristics make distribution a key focus issue for asset management companies. The industry s expansion has commenced only in the last few years and has been driven by advances in distribution. With the enormous potential of the market and the continued entry of new layers, one can expect significant change in the way investors are provided for. At the same time, the fact remains that the Indian asset management industry has grown tremendously over the past few years in spite of not having much constructive regulation on the distribution side. The Asset Management Industry in India consists of a vibrant and rapidly growing mutual funds sector, an insurance sector that is dominated by unit-linked insurance plans, and Venture Capital Funds, both domestic and foreign. Also Foreign Institutional Investors form a category that pool foreign retail or institutional funds and invest in Indian debt and equity. Private Equity funds both domestic and foreign constitute a booming segment as well. In the last decade or so, this industry has witnessed a wide range of regulatory changes that have brought about increased competition and a very impressive growth rate. Mutual Funds and Insurance sectors have been opened up to private players only 16 and 8 years ago respectively. Venture Funds have been allowed even more recently. The Indian equity market with its remarkable bull run throughout most of this decade right up to the crisis has boosted major growth in the asset management industry. Even now, India stands poised at the threshold of major regulatory changes that can open up new segments like Real Estates and Pension Funds to retail investors and private and foreign fund managers. The rapid growth of the sector is likely to continue once the dampening effects of the ongoing crisis are behind us.

Asset Management Firms:

Companies such as State Street Global Advisers, Barclays Global Investors, JP Morgan, Vanguard, BlackRock, and Fidelity Investments all had in excess of $1 trillion in client assets under management at the end of March 2007. In the brokerage sector, Smith Barney, Fidelity, and Charles Schwab each had more than $1 trillion in client assets at the end of 2006. A host of other asset management and brokerage firms are nipping at their heels. But the asset management industry has not escaped the hit other financial services companies took at the end of 2008 and into 2009. Baltimore-based Legg Mason, for example, cut 8 percent of its corporate workforce near the end of 2008-and industry insiders predict more layoffs. Until the economic crisis hit in 2008, the markets had been rising fairly steadily. In the summer of 2007, the Dow Jones Industrial Average hit record levels, and crossed 14,000 for the first time in its history. As the market rose, more money was poured into asset management and brokerage accounts. But the industry took a turn for the worse in 2008. After an average growth of 12 percent from 2002 to 2007, a study by Boston Consulting Group released in July 2009 found that global assets under management fell 18 percent in 2008.

References:

1. 2.

Baird, G., 2011. "Defining Public Asset Management for Municipal Water Utilities". Journal American Water Works Association May 2011,

Steven Goulden, Daiwa Institute of Research, The Asset Management Industry: implications and fostering Asset Management