Best Asset Management Companies

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Contributor, Benzinga
August 30, 2023

Finding success in investing requires you to keep a close watch over your holdings. Sometimes that’s not always possible from a time perspective. Individual investors might not feel they have the expertise to oversee their own holdings. They may feel timid about dealing with what could be a substantial amount of money.

For those investors, an asset management company may be the solution. It’s a company that focuses on helping investors of all kinds maintain control of their investments. These institutions are run by some of the biggest players in international finance. By and large, their knowledge and skill help investors find strategies for consistent financial health. Which ones are the best for your situation?

Quick Look at the Best Asset Management Companies:

5 Best Asset Management Companies

Hundreds of asset management firms are in business all over the world. A few of them have more to offer in terms of experience, performance, strategies and investment products. These top five companies are listed according to how they rank for specific types of investors.

1. Best for Individual Investors: Fidelity Investments

Fidelity may be the best-known brokerage for individual investors. Its asset management service is well-regarded for the sheer number of investment vehicles it can handle. Fidelity offers deep research and some of the biggest experts on day-to-day investments for regular people as well as a superior online experience.

ProsCons
No commission fees
Access to zero-fee mutual funds
Opportunity to buy fractional shares
High investment minimum for managed accounts 
Resistant to alternative assets like crypto
Possible conflict of interest if recommending Fidelity products over competitors

2. Best for Institutional Investors: BlackRock

Few companies have as much influence on the financial landscape as BlackRock. It has the highest-valued assets under management (AUM) of any financial company on the planet. BlackRock is a thought leader in investments, constantly adapting its outlook and strategies. These include a direct focus on sustainable investing.

ProsCons
Biggest asset management company in the world
Exceptionally high dividend yield 
Deep resources and technology for managing accounts
High minimums for mutual funds
Some history of sanctions for regulatory violations 
Strong concentration on a small number of institutional clients

3. Best for Long-Term Investment Strategies: Vanguard

Vanguard is squarely focused on the long-term financial health of its client base. It concentrates on low-expense investment vehicles like exchange-traded funds (ETFs) and index funds. Vanguard takes a deep interest in clients’ financial education, helping them make informed investment decisions on their own.

ProsCons
Moderate fee structure
Variety of services for digital customers and clients seeking personal support
Excellent source of education on long-term investments
Good returns on idle funds kept in an account
Limited capabilities with a website in need of updating
Does not stream news in real-time
Not suitable for occasional day trading

4. Best for Short-Term Investment Strategies: Interactive Brokers

Interactive Brokers may not have the same massive level of volume as the big management firms on this list, but it is tailored for day traders and short-term investment opportunities. It is especially known for its prominence in the online brokerage world, with innovative apps and products at reasonable costs.

ProsCons
Reasonable trading fees
Multiple products and services 
Access to extensive research tools
Website is difficult to manage 
Average customer service

5. Best for Alternative or Innovative Investments: J.P. Morgan Asset Management

Not all asset management companies have a taste for alternative investment vehicles like hedge funds, real estate or private equity. J.P. Morgan Asset Management leads the way in those areas. It is open to the customization of clients’ portfolios. J.P. Morgan Asset Management also performs all due diligence and handles risk management.

ProsCons
Owns largest bank in the U.S.
Ideal for self-directed investors
Broad range of expertise in all investment strategies
Investors must be very wealthy to qualify for certain products
High minimum investment requirements for lucrative possibilities
A long history of trouble with the SEC 

What is an Asset Management Company?

Asset management companies are institutions that oversee investment portfolios for their clients. The financial instruments they look after include stocks, bonds, mutual funds, ETFs, real estate and other types of assets. An asset manager aims to build clients’ wealth and monitor their wealth according to their investment objectives.

Benefits of Asset Management Companies

  • Financial expertise and experience in wealth management
  • Diversification across different commodities, asset classes and industries
  • Access to alternative or complex investment strategies
  • Time-saving execution of transactions and management
  • Regular and transparent updates on investment activity
  • Access to sophisticated research and analytical tools

Disadvantages of Asset Management Companies

  • Possibility of excessive fees that could undercut returns
  • Ceding control of investment management to an outside party
  • Risk of exposure to conflicts of interest
  • Requirement of minimum investment amounts by some companies
  • Potential for miscommunication on long-term financial goals

Key Factors to Consider When Choosing an Asset Management Company

What should you look for in a good asset management company? Here are a few things to consider.

Reputation and Trustworthiness

A strong investment manager’s reputation precedes them. They should have positive notices from previous clients that attest to their integrity and reliability. An asset manager with little to no reputation or uncertain experience needs to be fully vetted before taking them on. If you’re referred to an investment company, ask your source what they know about them. 

Performance Track Record

What is the asset management company’s experience in returning profits to its clients? The answer will provide insight into how effective its strategies are in risk management, asset allocation and concentration on its clients’ financial objectives. Asset management companies with positive credentials and success in diverse instruments are more likely to provide innovative and dependable results.

Client Services and Support

As much as it focuses on the balance sheet, an asset management company must still have exceptional one-on-one skills for dealing with clients. The best money managers leave an open door for their investors and are willing to answer all questions. The companies they work for should have superior customer support services that respond to requests promptly. The more services they can address, the better.

Does an Asset Management Company Fit Your Investment Objectives?

In a perfect world, asset management would be an investor’s full-time job. That’s obviously not possible for the vast majority of individual investors. It’s even hard for institutional investors to carve out time to focus on financial health. From time to time, it’s necessary to find outside help to maintain a consistent and strong portfolio.

For investors who don’t have the time or resources to monitor their portfolios, asset management companies could provide the solution. The best of them offer a full slate of services and commitment to understanding clients’ needs. They can also introduce innovative strategies that you may not be able to access otherwise. If you’re looking for outside help with investment oversight, compare what asset management firms can do for you.

Frequently Asked Questions

Q

What does an asset management company do?

A

An asset management company organizes and guides the investment portfolios of its clients, whether individual or corporate. Its responsibilities can include portfolio diversification, analysis and maximization of financial health and profits.

Q

Do asset management companies put investments as inventory?

A

No. They do not resell the assets they line up for their clients. Instead, they focus on the overall financial holdings of each client they serve.

Q

How does an asset manager make money?

A

They charge a percentage of their client’s assets under management as a service fee. Some may also charge performance fees if a client’s portfolio turns a profit.

About Sarah Edwards

Sarah Edwards is a finance writer passionate about helping people learn more about what’s needed to achieve their financial goals. She has nearly a decade of writing experience focused on budgeting, investment strategies, retirement and industry trends. Her work has been published on NerdWallet and FinImpact.