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What Is Funds Management?

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Funds Management

By WILL KENTON

Updated Jun 29, 2018

What Is Funds Management?


Funds management is the overseeing and handling of a financial institution's
cash flow. The fund 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.

Funds Management in Action


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 intangible
assets (e.g., intellectual property and goodwill), and tangible assets (e.g.,
equipment and 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" 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.

Divisions of Use
Fund management may be divided into four industries:

 Financial investment industry


 Infrastructure industry
 Business and enterprise industry
 The public sector

The most common use of "fund management" refers to investment management


or financial management, which are within the financial sector responsible for
managing investment funds for client accounts. The fund manager's duties
include 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 fee
and a certain percentage of the fund's performance, which serves as an incentive
for them to perform to the best of their abilities.

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