The Difference Between Asset Management and Investment Banking 

An asset management company handles client portfolios, while an investment bank must facilitate business mergers. Managing mutual funds falls under asset management. Meanwhile, investment bankers provide underwriting and debt financing assistance. This post will discuss the difference between asset management and investment banking. 

Asset Management Company vs. Investment Banking 

1 | What Is Investment Banking? 

Investment banking enables corporations and institutional funds to develop IPOs (initial public offerings). Investment bankers may also help their clients with debt financing, company profiling, and fundraising programs. 

High-value investor organizations (large funds) request investment banks to evaluate investment deals. Moreover, investment research companies ensure fair deals between the buyers and owners in corporate funding negotiations through high-quality performance projections. 

Stock or bond issuance is one of the primary investment banking solutions. Therefore, corporations can enter the stock markets and attract more capital resources. 

The investment banking outsourcing facility occasionally allows organizations to market their deal offerings to the right group of investors. They can combine the client service model with the dealmaker ecosystem. 

2 | What Is Asset Management? 

An asset management company oversees the investors’ securities (stocks and bonds). Its ultimate objective is to increase the returns on investment (ROI). If you consider the pension funds, asset managers help the pension fund managers grow their resources through strategic capital allocation. 

Likewise, asset management firms help investors with mutual funds and systematic investment plans (SIP). Their services provide long-term support to the clients. Notably, they serve both institutional clients and retail investors. 

The asset manager must know the investors’ risk appetite before making any investment decisions on buying, holding, or selling an asset in the investor portfolio. 

Role of Asset Management Company vs. Investment Banking 

1| Functions of Investment Banking Providers 

Investment banking outsourcing supports corporate fundraiser programs and helps enterprises enhance their funding pools. So, investment banks focus on executing a fair deal for the buyer institutions and the company’s founders. 

Mergers and acquisitions (M&A) deals involve ownership restructuring for two or more companies. Often, larger organizations acquire smaller competitors in the same industry. However, businesses can also acquire firms in different sectors to diversify their operational units. 

Reliable deal evaluation and execution require outsourcing the buyer negotiations to a reputable investment banking consultant. Additionally, IBs, or investment banks, can feature separate divisions that handle some commercial banking facilities. E.g., Citigroup (Citi bank). 

2 | Functions of an Asset Management Company 

Asset allocation or management services involve selecting, buying, holding, and selling investment vehicles on behalf of clients. If investors want to grow their wealth through mutual funds or hedge funds, asset managers can help them. 

Besides, asset management firms leverage investment research companies to understand market trends. Their facility monitors ECM (equity capital markets) and DCM (debt capital markets) to identify the best investment opportunities for their clients. 

Hedge funds are riskier and more complex; therefore, asset management companies facilitate the investment services linked to hedge funds. After all, hedge fund management is often sensitive and confidential about sharing proprietary investment insights with external parties. 

Conclusion 

Investment banking outsourcing firms are concerned with how to provide a fair deal and help corporations raise money for business growth. Meanwhile, asset management companies serve their retail and institutional investors with mutual funds or hedge investments. 

Hopefully, you have understood the difference between asset management and investment banking. Also, both require reliable investment insights to protect and develop client relations. 

SG Analytics, a leader among investment research companies, helps organizations and investors through high-quality equity insights and robust valuation facilities. Contact us today to benefit from multiple engagement models and ensure strategic excellence.