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   INSURANCE . RETIREMENT . INVESTMENTS   

Asset Management Terms – 5 Asset Management Terms Everyone Should Know!




This is the 3rd and last week of our segment and we will be focusing on Asset Management. What exactly is Asset Management? Simply put, Asset Management is the handling, operating, management or upgrading of other’s assets. These assets include both tangible and intangible assets; tangible assets being things that we can touch, such as land, buildings, machinery and office equipment, and intangible assets being things that we cannot touch, such as human capital, financial assets and intellectual property. Asset management is a service offered to those who wish to leave the management of their assets to firms or Insurance Companies

As with our previous information blogs on General Insurance Terms and Life Insurance Terms, we are covering 5 Top Asset Management Terms that anyone seeking Asset Management services should know.

1. Equity Fund: An Equity Fund, also known as a Stock Fund, is an open or close-ended mutual fund that deals primarily in stock. This type of fund is diverse and allows investors to buy in and access multiple types of stocks that are available for sale in the market. This method is easier than buying stock from different companies individually and gives more flexibility and convenience to the investor. In addition to this, Equity Funds are beneficial as they are less expensive to invest in than other types of mutual funds, allow easy selling through sales of shares and offer the services of Financial experts to the investor to assist in their decision-making.

2. Bonds: Bonds are fixed income instruments that act as a loan between an investor and a borrower; they are considered as a long-term debt to be repaid by the borrower. Bonds are commonly issued when companies or governments are trying to raise money to finance projects, or refinance existing debts. All bonds have a date of maturation, ranging from 1-2 years or even 10-30 years, at which point they must be repaid to the investors with the stipulated interest included.

3. Balanced Fund: A balanced fund, also known as a blended fund, is a mutual fund that generally keeps an equal mix of stock and bonds and are generally directed towards investors who seek a level of diversification in their investments. Balanced funds offer safety, income generation as well as capital appreciation in their investments, and are designed for investors who prefer stable, long-term returns that are less likely to be negatively impacted by shocks in the economy.

4. Net Asset Value: The Net Asset Value (NAV) represents the value of a fund and is calculated by fund’s assets minus the value of its liabilities. For example, if a Fund’s assets are valued at USD$50million and its liabilities are valued at USD$20million, then the net asset value is valued at USD$30million. NAVs are generally calculated on a per-share basis and helps the investor to determine if the Fund is undervalued or overvalued.

5. Investment Portfolio: An Investment Portfolio is a collection of all your investments; stocks, bonds, cash, real estate, etc. Within the investment portfolio, all of your existing investments are grouped into ‘asset classes’, namely: Equities, Fixed-Income Securities and Cash Equivalents. Each of these asset classes can be further broken down into other categories of assets. Having an Investment Portfolio helps make investing easier as you have all of your assets in one place, and from here you can make the best financial decision given your resources.

This brings us to the end of our 3-part educational segment. We hope these blogs made for good reading and we invite you to join us next week for our next installation. Thank you from Guardian Group!


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