Can anyone tell me the difference between these three industries/groups? They seem to be pretty much the same to me and I can’t really figure out how they are different from one another.
Well Investment Management and Asset Management are used fairly interchangeably I think. Hedge funds are a subset of the industry. Tricky enough to define exactly what a hedge fund is; essentially they tend to have very broad mandates, often invest across multiple asset classes and can be net long or short the markets. Other subsets of asset/investment management would be traditional equity and bond fund managers etc.
They are pretty close to each other, however, our firms has an Asset Management group, what they do is actuall manage the phyical asset (buildings, real estate) for clients.
Yeah, I think Carson is pretty much correct. Investment Management and Asset Management are pretty loose terms. However, I think Investment Management tends to focus on asset selection, i.e. telling clients how to allocate their money. Asset Management deals with handling the money once it is already allocated to some kind of fund. So, hedge funds would be a kind of Asset Management. These are not formal designations though. Different people might interpret the terms differently.
Basically I agree. AM and IM are pretty much interchangeable, and HFs are a subset of AM/IM. I think AM tends to be the more “industry correct” or preferred, but not to the extent that one has to be careful not to say IM. It may simply be that if you are part of a corporation that has investments and pursues other activities, IM is the name for the division of the corporation that manages the investments. If you are part of a company that manages investments as its *primary* activity, this company will usually call itself an “Asset Management” firm. When people ask me what a hedge fund is. I generally say it’s a “regulatory category” more than any one specific strategy. A hedge fund is essentially a mutual fund, but it can do much more than regular mutual funds are allowed to (they can short, use leverage and derivatives, etc.), and it can ignore regulations that are set for mutual funds because they supposedly can only have “sophisticated” investors who presumably understand better what can happen with these additional freedoms. Because the investors are supposed “sophisticated,” hedge funds aren’t permitted to advertise to the general public and they normally can’t have more than a hundred or so investors. The regulatory rules regarding Hedge Funds may well change in the wake of the financial crisis, and this can reshape lots of things. As HFs have grown, some changes are inevitable, but the sense of crisis and the extent to which HFs are perceived to have contributed to the crisis will affect how those regulations turn out.
Investment Management is the broadest term for investing, it covers everything including AM/HF/PWM/MF etc etc. Asset Management tends to refer to managing money for institutional investors rather than retail clients. Think hospitals, unis, pension funds etc. Hedge funds are simply private investment partnerships, they can be of any asset class or strategy. You can open your own LP and call it a hedge fund.
Hedge funds used to have a consistent definition, but these days it can do anything (asset mgmt, private equity, high frequency trading etc).