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Lesson 1: What is Money Management?

What is Money Management?

Money
management is a method of budgeting, saving, investing, spending or otherwise
managing the use of resources by an individual or a group. The primary use of
the term in financial markets is that of investment managers making investment
decisions for large pools of money, such as mutual funds and pension schemes.
Money management can also be more broadly referred to as “investment management,”
or “portfolio management.”

The Basics of Money Management

Money
management is a broad term that encompasses and combines products and
strategies across the entire investment sector. On the market, customers have
access to a wide range of tools and applications that allow them to handle
almost every aspect of their personal finances individually. When investors increase
their net worth, they also often seek professional money management advice from
financial advisors. Financial advisors are typically associated with private
banking and investment services, offering support for holistic money management
plans that may include estate planning, retirement and more.

Investment
company money management is also a central aspect of the investment industry as
a whole. Investment company money management provides individual consumer
investment fund products that cover all categories of investment assets in the
financial market. Investment money managers also facilitate the asset
management of institutional clients, with investment options for institutional
retirement plans, endowments, foundations and more.

In the
rising financial technology industry, personal finance apps are available to
help consumers with almost any aspect of their personal finances.

Top Money Managers by Assets

Global
investment managers deliver retail and institutional investment management
products and services that cover any investment asset class in the industry.
Two of the most popular types of funds are active managed funds and passively
managed funds.

The list
below shows the top 5 global money managers with assets under management ($M) as
of Q1 2019:

The Vanguard Group

The
Vanguard Group is one of the most well-known investment management firms,
representing more than 20 million clients across 170 countries. Vanguard was
founded in 1975 by John C. Bogle in Valley Forge, Pennsylvania, as a subsidiary
of the Wellington Management Company, where Bogle was chairman. Since its
launch, Vanguard has raised its total assets to $5.1 trillion as of October
2018. Of its 388 funds, 180 are U.S. funds, including the famous S&P 500
Index and Total Stock Market.

Pacific Investment
Management Company, LLC

Global
asset management company Pacific Investment Management Company LLC (PIMCO) was
co-founded by Bill Gross in Newport Beach, California, in 1971. Since its
founding, PIMCO has raised its assets under management (AUM) to $1.77 trillion
as of October 2018. The company has more than 775 investment experts, each with
an average of 14 years of investment experience. With more than 100 funds under
its umbrella, PIMCO is widely regarded as a pioneer in the fixed income market.

BlackRock, Inc.

BlackRock
Inc. (BLK) was founded as a $1 subsidiary of the BlackRock Group in 1988. It
was worth $17 billion in AUM by the end of 1993. By October 2018, the amount
had risen to a total of $6.32 trillion, making BlackRock the world’s largest
investment management company, with more than 12,000 staff in 70 offices across
30 countries. BlackRock’s ETF subsidiary, iShares, has about $1.6 trillion in
AUM internationally, accounting for 27 percent of the group’s total assets.

Fidelity Investments

Fidelity
Management & Research Company was founded in 1946 by Edward C. Johnson II.
As of October 2018, Fidelity had 24 million customers with a total wealth of
$6.9 trillion. The company provides 386 mutual funds, including domestic
equity, international equity, sector-specific, fixed income, index, money
market and asset allocation funds.

Invesco Ltd.

Invesco
Ltd. (IVZ) has been delivering investment management services since the 1940s.
In August 2018, the company announced that it had an AUM of $987.8 billion over
its 100-plus mutual fund services. The company offers over 100 ETFs through its
subsidiary Invesco Capital Management LLC. The organization saw some reduction
in AUM in 2017. But with the ensuing fall in its stock price, Invesco remains
one of the world’s leading asset management companies.