Asset Mgt vs Fund Mgt vs Investment Mgt vs Wealth Mgt: What's the difference?
If you work in banking or investment or any other sector in financial services, you might be wondering about the above. Perhaps because in your company you have investment manager or fund manager. Perhaps because in the lake or warehouse you have come across these terms: AUM or FUM.
Asset Mgt vs Fund Mgt vs Investment Mgt vs Wealth Mgt
Wealth management includes investment management, financial planning, tax planning, estate planning and retirement planning. Wealth managers work closely with their clients to understand their financial goals, risk tolerance, and their unique circumstances. They provide personalized advice and services to their clients.
Investment management and asset management doesn't include financial planning, tax planning, estate planning, and retirement planning. Investment management put client's money in various investment vehicles, such as stocks, bonds, mutual funds, and physical assets, with the goal of achieving the client's investment objectives.
Fund management doesn't include physical assets, but only financial assets such as funds, cash, bonds, stocks, and foreign currency. And money markets.
Asset management includes financial assets as well as physical assets like land, buildings, farms, plant, gold, and infrastructure like airport, railway, power station and wind farm. Asset management focus on maximising the asset value by managing the growth and risks.
AUM vs FUM vs AUA vs FUA
AUM (Asset Under Management) includes cash deposits and physical assets such as property, farms, and infrastructure. "Under Management" means that the asset management company has DISCRETIONARY control on those assets, meaning that they can make investment decision and can make the trades such as buying or selling security, without asking the client.
FUM (Fund Under Management) doesn't include cash deposits and physical assets. FUM only includes financial assets like stocks, bonds, mutual funds and money market funds. Forex in the form of currency funds are definitely included as financial assets.
AUA (Asset Under Advisory) is the amount of assets where the financial institution provides guidance and advice such as suggesting asset allocation or specific investment choices, but does not have discretionary control to make investment decisions or execute trades.
AUA can also mean Assets Under Administration. Asset manager provides administrative services (record-keeping, regulatory reporting, compliance monitoring, and safekeeping of assets), but the clients retain ownership and investment decisions. AUA is frequently used in family offices, wealth management firms, and custodial services where oversight and administration are required, but investment decisions remain with the client. Also assets held in clients' brokerage accounts.
FUMA means Funds Under Management and Administration. It means the funds (so financial assets only) that the wealth/investment manager has discretionary control (so able to make trades without asking the clients) and also fund under administration (so the client has full control, the investment manager can't make any trade without the client say so).
Title image: link