Techniques Used by Asset Manager Systems

Asset manager systems are used tools used to produce maximum return on investment of client funds by making superior investment choices. Giving research skills and investment expertise, asset manager systems seek to give greater diversification of client funds. There are some portfolio managers who are paid according to their client investment performance. Others receive payment as a percentage of assets under management. Asset manager use investment techniques to give necessary client liquidity, risk protection and preferences.

Asset Allocation

This is the most fundamental asset manager system technique. Think of an investment portfolio as a pie. By dividing the portfolio into thirds, the asset manager system spreads the risk across asset classes. Asset classes include bonds, loans of a corporation or government; stocks, the percentage of ownership in public companies; and money market instruments, cash equivalents. Derivatives and options, financial products used as proxies for another security; commodities, like gold and oil; and real estate may be considered as alternative assets. Diversification describes the spreading of portfolio risk.

Value Investing

This is an asset manager system technique that started in 1928 at Columbia Business School. Buying a security at less than its value mostly requires a long term hold strategy, according to asset manager systems. Value investing means buying an asset less than its intrinsic value. Securities bought at less than their intrinsic worth, or the value of the company’s commodities, factories, real estate and other tangible assets, may still decline in market value until many investors but the securities. Experts believe that securities are inexpensive relative to hard assets.

Tactical Asset Management

Otherwise called market timing and active allocation, tactical asset management differs from other asset manager system techniques. Tactical asset management can increase portfolio returns when the asset manager system is tweaked to the asset to model make money. Tactical asset models look contrarian as they may recommend buying or selling an asset when the current market value declines or rises. Tactical asset management differs from portfolio insurance in a way that it acknowledges the need to make portfolio changes when short term market conditions change.