Key takeaways
- Asset management is the practice of managing assets and securities with the goal of increasing their financial value over time.
- Private equity is one of the investment strategies used in asset management to grow assets.
- Asset management and private equity may seem similar, but their methods of operations significantly differ.
| # | Private Equity | Asset Management |
| 1. | Private equity firms invest for a longer timeframe, usually between 3 to 10 years. | Asset management invests within a shorter timeframe. |
| 2. | Focuses on investing in struggling companies. | Is broad and covers a lot of investments and management. |
| 3. | Invests in companies as primary investors | Does investments on behalf of their clients. |
| 4. | Private equity investments wield a higher level of control. | Investments are usually diversified. |
| 5. | Focuses on investment. | Considers everything about a client’s personal finance. |
What is asset management?
Asset management is the process of managing assets and resources with the goal of growing and increasing their financial value over time. It is usually carried out by asset managers. They are responsible for ensuring that the financial portfolios of their clients grow over time by monitoring the acquisition, operations, maintenance, upgrade, and disposal of assets and securities through methods that are cost-effective.
Pros and cons of asset management
| Pros | Cons |
| Monitoring of assets growth. | Investment strategies may become redundant. |
| Risk management. | Inability to identify potential investment strategies. |
| Improved reliability and efficiency | Some assets might be mismanaged for a long time without knowing. |
What is private equity?
Private equity is a type of alternative investment where firms invest money or capital in companies that are struggling financially. Private equity firms invest in companies with the aim of reselling them after they’ve been restructured. Here, control of the business is usually relegated to the investors.
Pros and cons of private equity
| Pros | Cons |
| They bring more funds. | Companies give up control. |
| Investments cut across industries | Possibility of selling the company. |
| They offer expertise and experience to aid company growth. | Cutting costs could involve staff layouts. |
Similarities between asset management and private equity
- They both focus on investment management.
- They invest with the goal of making profits for their clients.
- They both aim at making returns on their investment.
Can you go into private equity from asset management?
Private equity is one of the investment strategies employed in asset management to help grow and manage the assets and resources of their clients. So yes, you can go into private equity investing from asset management.
Are private equity firms considered asset managers?
Private equity is a type of asset management. Although they manage assets through private equity, they cannot be termed asset managers because they don’t cover the complete scope of asset management.
Bottom Line
Although private equity is a type of asset management, they are both methods of growing a client’s financial portfolio. Asset management is encompassing different strategies that ensure the growth of their client’s portfolios. While you can do asset management without private equity, you cannot do private equity without managing the resources allotted for that investment.
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very insightful.