Asset Management Companies offer their clients more diversification because they have a larger pool of resources than the individual investor. Pooling assets together and paying out proportional returns allows investors to avoid minimum investment requirements when purchasing securities on their own, as well as the ability to invest in a larger set of securities with a smaller investment.

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Asset management firms can diversify their clients’ portfolios. This gives them access to higher value options with better capital appreciation prospects, as well as mitigating the associated risk.

These pooled funds can be channelled into real estate, shares, bonds or other assets depending on the financial objectives of their clients. For example, the stock market can deliver fast returns, whereas real estate is ideal for long-term focused investors. You could choose whether you are a conservative or an aggressive investor and the asset manager would know what kind of assets to invest in.If you are an ethical investor and do not want to invest in companies producing certain products, the asset manager would consider this while investing. Clients usually put their faith in the expertise of asset managers, giving them a carte blanche role in the decision-making process.

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This pooled investment of clients’ portfolio can be done either actively or passively.

• Active asset management: This involves actively studying the client's assets, planning and looking after the investments by the asset managers and recommendations are provided based on the financial health of each client. Active asset management comes at a higher price to investors because more work is involved. These fees can vary, depending on the asset manager and the amount of assets in an investment portfolio.
• Passive asset management: Assets are allocated to mirror a market or a sector index. Unlike active asset management, passive asset management is a lot less laborious. It is also less tailored, requires less looking after and consequently is cheaper for investors. Asset managers who use a passive investment model, meaning they place client money in index funds that mirror major benchmarks, like the NGX 30, NGX Banking sector, NGX Insurance sector etc, cost less on an annual basis.

Asset management is a giant business. In 2019, it was estimated that the top 500 largest asset managers worldwide managed over $104 trillion worth of assets. Asset management is a financial service that can benefit low and high net worth individuals. Need a reliable asset management company in Nigeria, call us today or visit our website for more info.