Asset and Portfolio Management

Discover how asset and portfolio management services can help you reach your financial goals. Read our guide to learn more.

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Asset management and portfolio management are two services aimed at helping you reach your financial goals.

However, there is a difference between the two and each has its own use cases.

In this article, we explore asset and portfolio management. We look at the differences between the two financial services and their core components.

Asset Management vs Portfolio Management

In the wealth management industry, there are a lot of terms that are often used interchangeably. Two examples are asset management' and 'portfolio management'.

While both are wealth management services, they are different in scope and nature. Each has a distinct role in helping you achieve financial success.

In simple terms, portfolio management services specifically focus on the strategic management of investment portfolios. Meanwhile, asset management is a broader term. It refers to managing various financial assets, not just a portfolio of investments.

Let's dive deeper into each service.

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What is Asset Management?

Asset management looks to increase wealth over time. This is done by developing the client's financial portfolio while managing risk per the client's risk appetite.

Asset managers do manage investment portfolios. However, asset managers can also manage a variety of other things, such as:

Tangible assets, such as land and real estate investments
Alternative investments
Cash
Commodities

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The Core Components of Asset Management

Risk Management

Asset managers assess and manage risk. They do this by carefully analysing market trends, economic indicators and other factors affecting the performance of various assets. The goal is to create a well-balanced portfolio.

Tactical Asset Allocation

Asset managers focus on creating a diversified portfolio. Doing so helps to spread risk and enhance the potential rate of return (ROI). This involves allocating investments across different asset classes, industries and geographic regions.

Holistic Financial Planning

Asset management plays a broader role in financial planning. For this reason, services typically extend beyond investment management. It can include retirement planning, tax optimisation and financial advice, to name a few.

What is Portfolio Management?

Portfolio management, on the other hand, is a more specific subset of asset management. It focuses specifically on the management of investment portfolios. These typically include:

Individual stocks and shares
Bonds
Funds, such as mutual funds and exchange-traded funds (ETFs)

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The Core Components of Portfolio Management

Managing investment risk

A core component of portfolio management is managing investment risk. This means using various strategies to spread or reduce the overall risk. Some common examples of these strategies include:

Asset allocation
Diversification
Portfolio rebalancing

Monitoring and Rebalancing

Regular monitoring of the portfolio's performance is essential. Portfolio managers rebalance the asset allocation to ensure it remains aligned with the client's investment goals, time horizons and risk appetite.

Active and passive management

There are two types of portfolio management - passive and active management.

Active investment portfolio management is about outperforming the markets. This is a hands-on approach where the portfolio manager monitors the market and buys and sells accordingly to generate greater returns over time for their clients.

Passive management is a hands-off approach, the opposite of active investing. With passive investing, the aim is not to outperform the market. Instead, its objective is to track the market and match its performance.

Diving Deeper into Offshore Portfolio Management

Offshore portfolio management is especially significant in Asia. It involves managing investments in international jurisdictions.

This offers various benefits, such as tax efficiencies, global market access and enhanced confidentiality.

Effective management in financial centres like Hong Kong requires an expert understanding of both the local and international markets and regulations.

Emerging Trends and Technology in Asset Management

The emergence of digital assets, the focus on sustainable investing, and the shift towards transparent financial practices are reshaping the investment landscape.

Adopting data analytics, artificial intelligence, and blockchain technologies is revolutionising asset management and trading methods, particularly in tech-forward areas like Hong Kong. As a result, investing locally can be a great way to diversify your portfolio.

Sustainable Investing and Investor Education

Sustainable, or ESG, investing is gaining traction in Asia, with investors increasingly mindful of their investments' societal and environmental impact.

Due to the increased demand, asset management firms are incorporating ESG factors into their strategies. This allows clients to invest in a way that aligns with their beliefs without sacrificing profit.

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Asset and Portfolio Management with Holborn Assets

Individuals residing in Asia, especially expatriates, often find themselves uniquely positioned to capitalise on local investing opportunities.

While the end goal of both services is to help the client reach their financial objectives, it's essential to understand the difference between the two.

Asset management takes a holistic approach. It involves managing a diverse range of assets. Meanwhile, portfolio management services offer personalised investment strategies to meet clients' needs and goals.

Holborn Asia offers independent, professional advice and wealth management solutions. Our advice and services are tailored to you to ensure you have the right money in the right place at the right time.

We are part of the wider Holborn Assets Group, a leading, award-winning financial advisory company with over $2 billion in assets under management (AUM).

Book a free, no-obligation meeting today to learn how we can help you.