Year 3 · Applied Finance · Asset Management
Asset Management
Learn how professional investors build portfolios, define mandates, generate ideas, allocate capital, manage risk, measure performance and communicate investment decisions across active and passive strategies.
LEARNING OBJECTIVES
What you should be able to explain after this lesson
01
Explain the role of an asset manager and the difference between mandates, funds and benchmarks.
02
Understand active vs passive management and top-down vs bottom-up investing.
03
Build a basic portfolio from investment objectives, constraints and risk budgets.
04
Evaluate investment ideas using thesis, valuation, catalysts and risk.
05
Measure performance using absolute return, relative return, alpha, beta, Sharpe ratio and attribution.
06
Explain portfolio rebalancing, liquidity, drawdowns and investment communication.
CONCEPT MAPFrom mandate to portfolio decision
Asset management starts with the client objective, not with a stock idea
CORE FACTS · SAME IN EVERY MODE
Asset managers invest capital on behalf of clients such as individuals, pension funds, insurers, endowments and institutions.
A mandate defines the objective, benchmark, eligible assets, risk limits, liquidity needs and other constraints.
Portfolio decisions should be consistent with the mandate even when an individual investment idea appears attractive.
The benchmark provides a reference for relative risk and performance.
BeginnerTeaching style changes, knowledge does not.
An asset manager is paid to invest someone else’s money according to agreed rules. A retirement fund and a high-growth equity fund can own very different portfolios because their goals and constraints are different.
PROFESSIONAL VOCABULARYMandate / mandat Benchmark / benchmark Tracking error / tracking error
Formal set of objectives and constraints governing how capital may be invested.
Reference portfolio or index used to evaluate performance and risk.
Volatility of active returns relative to a benchmark.