Asset management: why have your money invested?
Would you like to invest, but you don’t know exactly how? In this case, you can choose to leave the investment to an asset manager. But what are the advantages and disadvantages of asset management compared to investing yourself?
What is asset management?
With asset management, you have your money managed by a specialised party or person. The aim of asset management is to retain your assets or, on the contrary, to allow them to grow. This is usually done through investments in shares, bonds or other investment categories. An asset manager requires a licence from the Netherlands Authority for the Financial Markets (AFM).
What does an asset manager do?
The objective of an asset manager is to protect your assets as much as possible or to increase their value. How the manager does this depends on your risk profile, your wishes and your financial possibilities. On this basis, the asset manager draws up a portfolio and an investment strategy for you.
Different types of asset management
It is good to know that there are different types of asset management. For example, there are parties that offer individual asset management, whereby decisions are made about your assets in personal consultation with you. Because this is tailor-made, there is often a high minimum investment.
You can also opt for a variant in which your assets are invested in model portfolios together with the assets of other clients. In this case, your assets are managed for you, but no personal customisation is required. With this variant, you pay lower management costs and the minimum investment is usually a lot lower.
Active vs passive
Then there is also the difference between active and passive management. Active management focuses more on individual shares and bonds. There is also relatively more trading in the hope of outperforming the benchmark (e.g. the AEX index).
In passive management, the focus is more on investment funds and ETFs and there is less trading in order to ‘follow’ the performance of the benchmark. Supporters of passive management often use the argument that, on average, it leads to the highest return over the long term.
Benefits of asset management: an expert who limits your risks
The biggest advantage of asset management is that there is an expert behind the buttons. So you don’t have to determine how you invest your money and when you buy and sell it. This can save you a lot of time and worries, especially when you have little or no experience with investing.
An asset manager does have that experience and knowledge. He knows exactly how to set up an investment portfolio, how to limit the risks of investing as much as possible and how to increase your chances of a positive return.
The disadvantages of asset management: extra costs and minimum investment
A disadvantage of asset management is that you pay costs for the management. The exact amount of these costs depends on the asset manager. Some parties charge more than others. The management costs at Crypto Harbor Springs Managed Investment are relatively low. You pay €1 per month service costs and a maximum of 0.69% management costs per year.
Another disadvantage of asset management is the minimum investment required by some managers. For example, a minimum investment of € 25,000 to sometimes as much as € 1,000,000 often applies to individual asset management. The higher the amount, the more personal customisation will take place.
Not everyone has this type of amount at their disposal. Fortunately, there are also parties that set lower requirements in terms of minimum contributions. For example, there are parties where you can have your money managed from € 10,000. At Crypto Harbor Springs you can even use asset management from € 100 per month.