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Asset Management Companies In India | Asset Management Firms in India
- An asset management Companies business gathers funds from clients and invests them in a variety of investment possibilities, including shares, debt, real estate, gold, and so Asset management encompasses more than simply the purchase and sale of assets; it also involves the management of financial assets and other investments. in real estate
- Hiring someone to handle your investment account may appear to be a luxury that only the rich require — or can afford.
- However, asset management is about getting the most out of your money. It is critical to ensure that every rupee gets maximized regardless of how much money you have in your portfolio.
- It takes a full-time job to find the best assets on the market. It is no wonder that individuals pay investment management firms to do it for them.
- Asset management comprises a short- or long-term strategy for acquiring and selling portfolio securities. It may also involve banking, budgeting, and taxation services and duties.
- In another context, the phrase refers to managing and trading the securities in an investment portfolio to achieve a financial goal. It also seeks to increase the market value of ownership of an asset to increase its returns, whether real estate or any other.
So, What Exactly is an Asset Management Company?
Asset management companies handle the funds of their clients. They choose the best assets from fast-growing, riskier equities to safe but slow-growing bonds. The goal is to get the desired return while maintaining a level of risk that the client is comfortable with. Asset management firms undertake the entire process of developing an investment portfolio for their customers and provide access to fresh investment possibilities that would not otherwise be available.
Asset management companies also serve a range of clients. While some concentrate on high-net-worth individuals, others work for businesses, charities, trusts, or large enterprises.
Here is; Investment Management Vs Asset Management: Types and 6 Differences.
What are the Functions of Asset Management Companies?
The following are the three primary responsibilities of asset management firms.
- Determine financial objectives and risk tolerance: Asset management businesses require crucial information. These are how much the customer has to invest, how much return they desire when they need access to their money, and how much they are ready to risk losing.
- Keep track of possible investments: Cash deposits and government bonds are two types of investments, as shared in young firms with uncertain futures. An asset management firm must be aware of the many options and analyze the investment risks and rewards.
- Develop investing techniques: Each customer requires a portfolio of assets tailored to their specific objectives. A broad portfolio with investments distributed over a wide range of assets decreases risk. It is like avoiding putting all your eggs in one basket.
- Performance Evaluation: Investment management companies are required to give information to unitholders that have a direct impact on their mutual fund holdings. It must also provide investors with frequent details on sales and repurchases, NAV, portfolio data, and so on. In simple terms, investment management companies must answer mutual fund investors and protect their interests. They must also handle consumer concerns regarding their mutual fund schemes.
But, what is Real Estate Asset Management?
Real estate investment management gets required to succeed in the real estate sector. Most real estate investors manage their assets to some extent, while corporations and experienced investors may hire an asset manager to manage their investment portfolios.
Real estate asset management is the management of an investment to increase the value and return. But how does one go about it?
In general, real estate asset investment management focuses on four areas:
- Identifying the Most Profitable/Consistent Revenue Sources: It is always good to locate a house that has the potential to appreciate considerably in value. However, a steady profit is as crucial as a lump sum profit. Good real estate investors look for assets with a possible revenue stream. Investing in rental homes is one excellent strategy to accomplish this.
- Reducing Expenses: When you include operational costs, upkeep, closing fees, and taxes, a property can be expensive to maintain. Fortunately, there are several methods for lowering the cost of investment homes. For example, you may select the best-value contractors for fix-and-flips or acquire low-interest financing.
- Risk Management: Risk exists in all types of investing. Some investment properties, however, are riskier than others. Risk mitigation and contingency planning are components of real estate asset management.
Here is: Real Estate Risk Management: Tips to Safeguard Your Investment.
- Portfolio Development: Ideally, the more you invest, the more profit you will make. So, the goal of real estate asset management is to increase and diversify a real estate investment portfolio.
What do Real Estate Asset Management Companies do?
A real estate asset management company is someone that looks after a client’s real estate assets. All sorts of investment assets, including residential, commercial, mixed-use, and holiday rental properties, can be managed by asset management companies.
The following are typical responsibilities of a real estate asset management company:
- Cash Flow Management
Many real estate investors want to maintain a consistent cash flow to fund their investments, pay off their mortgages, or increase their monthly income. Rent payments from residential or business tenants often produce cash flow. Asset management companies help investors increase cash flow from their properties by identifying cost-cutting opportunities or negotiating more profitable rental arrangements.
- Find Lenders
To acquire or enhance a property, an investor may require finance. The asset management companies assist the investor in locating an appropriate lender or loan.
- Assist with Property Transactions
An asset management company can help an investor with all of the complexities that come with buying or selling a home.
- Negotiate Property Agreements and Leases
Real estate asset management companies can help the owner create property agreements and leases. The asset management company’s job is to create leases that are acceptable to renters while still being lucrative for the property owner.
- Asset Marketing
An asset management company may be responsible for marketing a property that is being sold or rented by the owner. The asset management companies would either produce listings or locate a qualified realtor or property management firm.
- Property Values May Be Increased
Any property value can be increased! An asset management company will look for methods to improve a business or residential property’s value and return on investment. For real estate asset management companies that work for fix-and-flip investors, this is a crucial duty.
- Conduct Market Research
A real estate asset management company should be a market research specialist. To assist the investor in making sound investment decisions, asset management companies closely examine market trends. He or she will assist the investor in identifying attractive real estate markets to invest in.
- Making Financial Projections
By analyzing the data on all of the property owner’s real estate assets, the asset management companies may forecast how much revenue the investor will receive on his or her current properties, as well as on potential properties the investor is interested in purchasing.
- Create a Budget
A budget for spending and future investments will be created by real estate asset management companies.
- Create or revise a financial plan
Real estate asset management companies will devise a strategy to help the investor meet his or her financial objectives.
If you want to invest in commercial real estate, Assetmonk can be the ideal option for you. Assetmonk is a WealthTech Platform that offers asset management services in Hyderabad, Chennai, and Bangalore and IRRs ranging from 14 to 21%. Our products get classified into three types: Growth, Growth Plus, and Yield. To learn more about real estate investing and our services, please visit our website!
Emerging Trends in Asset Management in India
There are two things that investors in India, or anywhere, are mainly concerned with: growing the value of their investments, and growing the value of their assets.
When we talk about asset management, we refer to working towards the systematic management and achieving the potential of our assets for which either we, or a group is responsible.
In this article, we’ll dive into what asset management is, how asset management works in India and emerging trends around it.
What is Asset Management?
To put it in simple terms: Asset management is like taking care of your belongs to make sure they grow in value.
Let’s say you have some money to invest. Instead of keeping it in a bank account, you give it to a professional who knows how to increase its value, and he’ll do so by investing your money in different financial instruments, such as stocks, bonds, or real estate. This is where Asset managers come in.
This professional will track your investments, make decisions about where to put your money, and work to increase its value over time. Just as you would hire a gardener to care for your garden and help it thrive, asset managers help your money grow and work for you.
Is it Necessary to Hire an Asset Manager?
Technically…not really. If you’re willing to put in the work and do the research, make & track your own investments, and over time build your own diversified portfolio, you might not need an asset manager.
But, asset management is a lengthy and multifaceted process that involves: Buying, operating, maintaining, regulating, upgrading, and at the end, disposing of assets in a profitable manner.
After all, the end goal of asset management is to increase the returns of the investors.
Asset managers are professionals who have years of experience and a track record in increasing the wealth of investors over time by making smart and high return investments.
Asset managers go by a number of different names, such as: investment advisors, financial advisors, wealth managers, institutional wealth managers, registered investment advisors (RIAs), and even stockbrokers.
Now that we’ve covered the basics of asset management, let’s look at asset management trends in India:
Asset Management Trends in India
All emerging trends in asset management India are pointing towards impressive growth potential, mainly driven by economic and socio-demographic factors. Here are some key trends
Strong Economic Growth
As per Amundi Research Institute, India’s economic growth looks set for stable growth over the next decade. Average GDP is expected to be around 6.1% per year, which is almost double the 3.7% average expected for emerging economies.
The need for new financial investments and increasing development and urbanisation will drive growth in India in the next decade.
Shift in Investor Sentiment
Investor sentiment in the market is changing. More and more investors in the equity market are moving towards value stocks, cyclical industries, mid & small caps, & alternative investments, which indicate a shift in the landscape for investor preferences.
Alternative Investments Are Growing
Over the last 5 years, the alternative investment industry has seen a compound annual growth rate (CAGR) of 26%, as per the Economic Times. Further, assets under management (AUM) will reach Rs 13.74 lakh crore by June 2024, according to the data.
And based on another report by One 360, alternative investments are expected to become a whopping 20% of India’s total AUM (Assets Under Management).
Here, assets under management (AUM) refer to the total market value of ALL financial assets. Thus, more and more investors are shifting from traditional investments to alternative investments, like real estate, looking at this key investment trend in India.
Real Estate on the Rise
Real Estate has always been a stable money maker for investors, and real estate trends for the future are no different.
A report by real estate consultant Knight Frank India in collaboration with NAREDCO (National Real Estate Development Council) states that India’s real estate sector is projected to reach $6 trillion (!) by 2047.
Asset management of real estate depends on the type of real estate investment, whether its fractional ownership, or REITs, or outright full ownership of commercial or residential property.
Fractional Ownership Given a Boost
India’s fractional real estate ownership market currently sits at around $500 million. Based on a new JLL analysis after SEBI notified the new regulations titled SEBI (REIT) (Amendment) Regulations 2024, the market is now projected to grow by ten times, and eventually surpass $5 billion Assets Under Management by 2030.
This is one of the biggest asset management trends in India right now. In fact, commercial real estate, more specifically office spaces account for 90% of India’s fractional ownership market and assets under management (AUM).
What is the Future of Asset Management in India?
Technology Integration
Technological innovation is written in the future of asset management in India. Digital investment platforms, alternative investment platforms like Assetmonk, AI, machine learning, and blockchain technology will revolutionise and enhance how asset managers operate.
This is a trend that’s already been set in motion, and nothing can stop it now.
Sustainable Investing
Environmental, Social, and Governance (ESG) considerations will become integral to investment decision-making in India. Sustainable investing – driven by increasing awareness of climate change and social responsibility – will gain traction among investors and asset managers; influencing capital allocation and corporate behaviour.
Sustainable investing is not just an investment trend, it is the path towards the future of the investment landscape in India.
Alternative Investments
Investors will seek diversification and higher returns, so alternative asset classes such as private equity, venture capital, real estate, and hedge funds are expected to play a more significant role in portfolios. India’s maturing alternative investment ecosystem will offer opportunities for innovative strategies and niche asset classes.
Regulatory Intervention
Regulatory reforms aimed at enhancing transparency, investor protection, and market integrity will continue to shape the future of asset management & asset management trends in India.
And they already have begun to do so, with the notification of the SEBI (REIT) (Amendment) Regulations 2024.
Invest with Assetmonk
The modern day investment world has drastically changed over the last few years. The alternative investment fund (AIF) industry has seen remarkable growth, even achieving higher growth rates than traditional investment options such as mutual funds.
Investors also are becoming more empowered. More and more investors are seeking higher returns and opting to invest in hedge funds, private equity, venture capital, and alternative real estate.
capital, and alternative real estate.
Through Assetmonk’s innovative approach to fractional ownership, investors gain access to premium real estate assets without bearing the weighty upfront costs. The minimum entry ticket to invest in our fractional ownership models is Rs 25 lakh. Our model allows investors to diversify their portfolio and achieve higher return rates at the same time.
Assetmonk’s web based investment platform offers a transparent and seamless process. We empower investors with real time updates on the property, monitoring capabilities, and customised participation in the decision making processes related to the property.
What Do Asset Management Companies In India do FAQ’S:
How does an asset management company work in India?
Individuals and businesses use asset management firms to handle their finances. To help their customers increase their money and portfolio, they make well-timed investment decisions on their behalf. Asset management companies can diversify their customers’ portfolios by working with a group of various investors.
What are the function of an asset management company?
Asset management firms perform activities such as research and analysis, portfolio construction, performance review, and so on.
What is the future of asset management companies in India?
During the projected period, the India Asset Management Market is expected to develop at a CAGR of around 14%. The top 10 asset management firms (AMCs) in India own (AUM) worth INR24.46 trillion, accounting for about 80% of the total sector assets.
