Portfolio Management Services
Institutional Fund Management (Information)
Abacus Consulting Services does not provide portfolio management
services. We do, however, provide information about the industry.
The activity of institutional fund management has several facets e.g.
employment of professional fund managers, research (e.g. of individual
assets and asset classes), dealing, settlement, marketing, internal audit,
the preparation of reports for clients. The largest financial fund managers,
or institutions, are complex financial firms with all the complexity that
their size demands. Apart from the people who bring in the money (marketing)
and the people who invest it (the fund managers), there are compliance staff
(to ensure that no laws or financial market regulations are broken),
internal auditors of various kinds (to examine internal systems and
controls), financial controllers (to control the institutions own money and
costs), computer experts, and the "back office" (the people who track and
record transactions and fund valuations for sometimes literally hundreds or
thousands of clients per institution).
Key problems include:
* revenue is directly linked to market valuations, so in the event of a
major fall in asset prices revenues decline precipitately relative to costs;
* it is difficult to sustain above-average fund performance and at times of
poor performance clients may not prove patient;
* successful fund managers are expensive and may be headhunted by
* above-average fund performance requires the flair of good fund managers
and yet clients usually want to hear that they are hiring a firm (with a
single philosophy and internal disciplines) rather than the skills of one or
two young men/women;
* evidence suggests that size of investment firm correlates inversely with
fund performance i.e. the smaller the firm the better the chance of good
The most successful investment firms in the world have probably been those
that have been separated physically and psychologically from banks and
insurance companies. That is, the best performance and also the most dynamic
business strategies (in this field) have generally come from independent
investment management firms.
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