Answer to Question #154511 in Management for Prabhdeep

Question

Guidelines followed by asset management companies

Answer 1

The asset management companies follow the process such as asset allocation, research analysis, portfolio construction, and performance review in the decision making that will profit the investors.

1.     Asset allocation

The finance managers are guided by a specific financial goal or objective when deciding on the asset to invest can be made. For instance, most loan companies do not invest their support, exceeding 20% on the management equities.

2.     Research and analysis

Developing a funds portfolio relies more on researching and analyzing the productivity of the asset classes. The experts' responsibility is to study the targeted market, economic aspects such as micro and macro-economic, make regular fund performance, and hand over the reports to the manager to make a decision that will generate income.

3.     Portfolio construction

After the asset management company team has made research and analysis and reports to the manager, the fund manager can choose securities to buy or sell.

4.     Performance review

the asset management team should regularly revisit their performance to ensure they work within the financial goals and objectives. Moreover, regular performance reviews will help the management timely identify the mistakes before creating a threat to the company. Performance review also enables the company to create and send a regular update on sales and repurchases, details of the portfolio, among others to their investors and trustees.