What is active asset management?
You often hear of asset managers who engage in active asset management . But what is this actually and what does it mean for your investments?
An active asset manager does a lot of research into the shares in which to invest with the capital they have at their disposal. So they actively search for the best investments in the form of shares or bonds. Selecting the right shares is also called ‘stock picking’.
It is important to know that the costs of an active asset manager are higher than those of a passive asset manager. A passive manager will, for example, only invest the assets in the S&P 500 or the AEX and thus follow the market.
However, an active asset manager ensures that a solid strategy is followed and that simply costs more time and money.
An active asset manager
Every asset manager can choose to manage assets actively or passively. The big difference here is that a passive asset manager invests in one or more funds, such as the S&P500 and the AEX or, for example, a sustainable fund. This gives you an average ROI (Return on Investment). An average return. However, an active asset manager actively searches for promising shares and spreads the assets over high and low risk shares, which increases the returns.
Active asset management performance
It is important to realize that an active asset manager means that you can achieve a higher, but certainly also a lower return than a passive asset manager.
Stock picking can be good, but also bad. One year the ROI can be twice the market growth, but the next year you may lose a few percent.
Costs of active asset management
The costs of active asset management are therefore higher than those of a passive asset manager, because they perform fewer actions for you. It is important to think carefully before making a choice. An active asset manager charges a brokerage fee that, for example, amounts to 1.27% of your total assets. That sounds low, but it can have a significant impact on the return over the years. In addition, some asset managers charge an ‘action fee’. This means that you pay a fee for every action (i.e. buying or selling shares) that they perform. These costs can have a huge impact on your return.