Limited Time Offer: Save 10% on all 2021 and 2022 Premium Study Packages with promo code: BLOG10    Select your Premium Package »

The Asset Management Industry

The Asset Management Industry

Buy-Side vs. Sell-Side

Asset managers are typically deemed to be on the buy-side. This ideally means that they buy the products of sell-side firms. Buy-side firms include asset managers, hedge funds, institutional investors, and retail investors. On the other hand, sell-side firms include investment and commercial banks, stockbrokers, and market makers.

Types of Asset Managers

Active vs. Passive Managers

Active managers represent around 80% of the asset management industry. Through fundamental and quantitative research, they attempt to outperform benchmarks, such as the S&P 500. On the contrary, passive management simply tries to replicate the returns of a market index.

Traditional vs. Alternative Asset Managers

Traditional management usually focuses on being long stocks and bonds to create diversified portfolios for their clients. In contrast, alternative management uses leverage, derivatives, long-short strategies, etc. to either outperform a predetermined index or to create a return that is uncorrelated to the market.

Lately, there is a blurred line between traditional and alternative management. Many traditional managers have introduced higher-margin alternative products to clients.

Ownership Structure

Most asset managers are privately-owned firms. However, some publicly-traded asset management firms also exist. These often offer services such as insurance and/or banking services.

Asset Management Industry Trends

Growth of Passive Management

Passive management is gaining currency in the asset management industry. The two key reasons for this are the low fees charged for passively-managed funds and the fact that active managers are having a hard time beating indices in increasingly-efficient markets.

Big Data

Nowadays, algorithms are much faster at analyzing earnings and economic news than humans. This opens the door to short-term trading. In fact, many asset managers are now using machine-learning techniques to help process data.

In order to generate alpha, asset managers are trying to discover data with predictive potential faster than fellow market participants.

Robo-Advisors

In 2017, robo-advisers managed an estimated US 180 billion in assets. The main advantage of robo-advisors are that:

  • they seem to attract a younger crowd of investors;
  • they charge lower fees because of the scalability of the technology; and
  • they provide low-barrier to entry to other firms, such as tech firms, to enter the lucrative asset-management industry
Featured Study with Us
CFA® Exam and FRM® Exam Prep Platform offered by AnalystPrep

Study Platform

Learn with Us

    Subscribe to our newsletter and keep up with the latest and greatest tips for success
    Online Tutoring
    Our videos feature professional educators presenting in-depth explanations of all topics introduced in the curriculum.

    Video Lessons



    Sergio Torrico
    Sergio Torrico
    2021-07-23
    Excelente para el FRM 2 Escribo esta revisión en español para los hispanohablantes, soy de Bolivia, y utilicé AnalystPrep para dudas y consultas sobre mi preparación para el FRM nivel 2 (lo tomé una sola vez y aprobé muy bien), siempre tuve un soporte claro, directo y rápido, el material sale rápido cuando hay cambios en el temario de GARP, y los ejercicios y exámenes son muy útiles para practicar.
    diana
    diana
    2021-07-17
    So helpful. I have been using the videos to prepare for the CFA Level II exam. The videos signpost the reading contents, explain the concepts and provide additional context for specific concepts. The fun light-hearted analogies are also a welcome break to some very dry content. I usually watch the videos before going into more in-depth reading and they are a good way to avoid being overwhelmed by the sheer volume of content when you look at the readings.
    Kriti Dhawan
    Kriti Dhawan
    2021-07-16
    A great curriculum provider. James sir explains the concept so well that rather than memorising it, you tend to intuitively understand and absorb them. Thank you ! Grateful I saw this at the right time for my CFA prep.
    nikhil kumar
    nikhil kumar
    2021-06-28
    Very well explained and gives a great insight about topics in a very short time. Glad to have found Professor Forjan's lectures.
    Marwan
    Marwan
    2021-06-22
    Great support throughout the course by the team, did not feel neglected
    Benjamin anonymous
    Benjamin anonymous
    2021-05-10
    I loved using AnalystPrep for FRM. QBank is huge, videos are great. Would recommend to a friend
    Daniel Glyn
    Daniel Glyn
    2021-03-24
    I have finished my FRM1 thanks to AnalystPrep. And now using AnalystPrep for my FRM2 preparation. Professor Forjan is brilliant. He gives such good explanations and analogies. And more than anything makes learning fun. A big thank you to Analystprep and Professor Forjan. 5 stars all the way!
    michael walshe
    michael walshe
    2021-03-18
    Professor James' videos are excellent for understanding the underlying theories behind financial engineering / financial analysis. The AnalystPrep videos were better than any of the others that I searched through on YouTube for providing a clear explanation of some concepts, such as Portfolio theory, CAPM, and Arbitrage Pricing theory. Watching these cleared up many of the unclarities I had in my head. Highly recommended.