Funds Management

What is 'Funds Management'

Funds management is the management of the cashflow of a financial institution. The funds manager ensures that the maturity schedules of the deposits coincide with the demand for loans. To do this, the manager looks at both the liabilities and the assets that influence the bank's ability to issue credit.

BREAKING DOWN 'Funds Management'

Funds management – also referred to as asset management – covers any kind of system that maintains the value of an entity. It may be applied to both intangible assets like intellectual property, goodwill and financial assets, or human capital, and tangible assets, such as real estate. It is the systematic process of operating, deploying, maintaining, disposing and upgrading assets in the most cost-efficient and profit-yielding way possible.

A fund manager must pay close attention to cost and risk to capitalize on the cash flow opportunities. A financial institution runs on the ability to offer credit to customers. Ensuring the proper liquidity of the funds is a crucial aspect of the fund manager's position. Funds management can also refer to the management of fund assets.

In the financial world, the term "fund management" ultimately describes people and institutions that manage investments on behalf of investors. An example would be investment managers who fix the assets of pension funds for pension investors.

Fund management may be divided into four different industries: the financial investment industry, the infrastructure industry, the business and enterprise industry, and the public sector.

Financial Fund Management

The most common usage of the term "fund management" covers investment management or financial management in the financial sector that manages investment funds for client accounts. The fund manager's job includes studying the client's needs and financial goals, creating an investment plan, and executing the investment strategy.

Classifying Fund Management

Fund management can be classified according to client type, the method used for management or the investment type.

When classifying fund management according to client type, the fund managers are either business fund managers, corporate fund managers or personal fund managers who handle investment accounts for individual investors. Personal fund managers cover smaller investment portfolios compared to business fund managers. These funds may be controlled by one fund manager or by a team of many fund managers.

Some funds are managed by hedge fund managers who earn from an upfront free and a certain percentage of the fund's performance that acts as an incentive for the fund manager to do well.

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