What is House organizational structure in Asset Management
All asset management
houses have different organizational structures, the purpose of this
topic is to describe the roles performed by a typical asset management
houses directors performed by a typical assets management houses
directors and staff , paying particular attention to the role most closely
affecting the core business of managing clients assets
A sample organization chart is provided overleaf. Actual management structure of assets management companies are rarely this straight forwards, many UK companies are owned by European or American parents making reporting lines clear. However, the broad responsibilities and chief current of senior directors are generally as follows.
- Chief Executive
Officer : Responsible for the over all management and direction of the
company , particularly in terms of building an effective and cohesive
team to manage the business
- Chief Investment Officer : Takes responsibility for the delivery of fund performance and , in particularly, endeavors to consistently outperform the company it is the CIOs responsibility to promote a team approach ( rather than a star fund manager culture)
- Chief Financial Officer : Essentially the finance director, but also usually responsible for general administration
- Chief operating Officers: Overseer of the companys operations, particularly in the area of ensuring that transaction carried out on behalf of client is properly processed. Importantly must ensure that the systems are in place to ensure compliance with regulations, and that all client and regulatory reporting is carried out to the satisfaction of trustees and regulators
- IT Directors : This role is becoming increasingly important as more and more reliance is placed on, inter alia, the electronics sourcing of market and other data, the automation of assets management process (e.g. the drive towards STP ) and the electronics marketing of products over the internet
- Marketing Directors: This function is absolutely essential to modern day asset management. The asset management company needs to sell itself to all of the different segment of the market, pension funds, life funds and retail (generally unitized vehicles sold via Independent Financial devisers (IFAs)) . There is an increasing trend in the use if e-commerce to market assets management products, particularly unitized vehicles as market open up across Europe.
- Strategy director: Has asset allocation responsibility, ie makes the highest level decisions with regards to allocation of funds between equities, bonds, property and cash. May also make decisions regarding allocation between equity markets. Usually responsible for ensuring strategy implementation in a timely and consistent fashion. Economics ih his team will analysis fundamental data and trends to forecast future market conditions.
- Compliance Officer: Responsible for ensuring that the asset management firm operates with in the parameters required by regulators such as the FSA and clients.
The fund management takes over all responsibility for the fund from an investment perspective, i.e. its performance, risk profile and dealing on the clients behalf .Day to day contact (e.g. Provide valuation of portfolios and other information) is generally carried out by a separate client services team. Fund managers are responsible for beating (i.e. achieving a higher return than) their bench mark (e.g. the Morgan Staley capital international world equity index, JP Morgan Salomon Brothers etc.) The fund manager will also often be responsible for ensuring that the fund has cash available when required to meet obligations (usually called the liability stream) of the fund (eg to pay pension entitlements, insurance claims etc.)
Fund management responsibility is usually carried out by senior investment staff with other , often related , roles, Generally the larger the client, the more senior the fund manger (who may also be know as the investment Director); thus the CIO may take on the investment directors role for a large pension fund mandate . Whereas a UK equity desk energy specialist might also take on fund management responsibility for a UK Equity OEIC.
House Policy on markets and stocks is reviewed at each investment departments morning meeting. This meeting is used to share information with regard to economics and market conditions, as well as trading and other activities planned for the day. In additions to their role as market and security, fund managers also take responsibility that orders are executed accurately, ie that the correct line of stock has been ordered, that sufficient cash will be available for settlement and sold responsible for stock certificates0 fund managers are also responsible for ensuring that all clients receive equal treatment, ie, stock are to be bought simultaneously across all similar funds.
The global equity market is generally divided I to regions of the world, each region having a dedicated desk and with specialization occurring in emerging markets. For example : French and German markets would be handled by the mainstream European desk, where as eastern European markets might b separately handled by an Emerging European Specialist . Each desks resources are roughly determined by the value of the funds for which they are responsible. For most UK based fund mangers, the UK Equity desk is usually the largest given the (unexplained by modern portfolio theory) large allocations made to the domestic market. UK equity desks can usually afford, in terms of resource, to have industry specialists (e.g. Finance, consumer goods etc) where as overseas desks, e.g. the European desk, may have country specialists.
Security research involves collating data from the vast quality of broker research provided, preparing house earning estimates and modeling the impact of changes on earning forecasts of economics news and changes in market consensus.
A valuable source of income can be obtained by lending securities owned by funds to other financial institution that needs to deliver a security that they do not own. This need can arise through errors being made when selling out of a position, or by speculators in the market deliberately selling short security that they do not own in the hope that the value of the security will fall, there generating a profit.
is responsible for all systems and data used by assets managers. Data
includes real time data and news, supplied by such vendors as
Bloomberg and Reuters, and historic data. Systems include back office
investment accounting (which is the prime record for the assets managers
holdings) orders management and dealing systems and fund analysis decision
| Quantitative Analysis in Asset Management | Roles of Asset Allocation | About Compliance in Managing Assets | Asset Cost Analysis | Equity Fund Management | Hierarchy of needs theory | Internal Audit Functions |
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Thursday, June 17th, 2021
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