Asset Management Fundamentals

Crypto & Asset Management

• Asset Management (AM) is the practice of increasing total wealth by acquiring, maintaining, and trading investments that have the potential to grow in value.
• Asset managers generate revenue by charging clients fees based on assets under management (AUM), performance, or transactions.
• Common Asset Management Strategies include active vs passive management, growth vs value investing, balanced or hybrid approaches, and socially responsible investing.

Types of Asset Managers

• Registered Investment Advisor (RIA)
• Investment broker
• Financial advisor
• Robo-advisor

Asset Management Strategies

• Strategies depend on the client's risk/reward preferences.
• Common strategies include: active vs passive management, growth vs value investing, balanced or hybrid approaches, socially responsible investing, and tactical vs strategic approaches.

Diversification in Asset Management

• Asset managers diversify their portfolio to manage the level of risk
• Diversification reduces risk by spreading investments across asset classes
• Strategies include determining correlation between assets, diversifying across asset classes (e.g., stocks, bonds), and geographic diversification.

Types of Funds

• Asset managers create dedicated investment funds (vehicles) such as monetary funds, fixed income funds, equity funds, mixed funds, alternative investment funds (AIFs), and exchange-traded funds (ETFs).

Crypto Asset Management

• Crypto Asset Management involves managing digital assets (cryptocurrencies, NFTs, protocol tokens) to grow portfolio value.
• Strategies include holding (HODL), trading, staking, dollar-cost averaging (DCA), and yield farming.

CEX vs DEX

• CEX (Centralized Exchange) - online registration, KYC checks (ID & selfie), final approval
• DEX (Decentralized Exchange) - connect your Web3 wallet, ready to swap crypto

Web3 Wallets

• Web3 wallets are digital wallets that store unique digital codes (crypto assets) like Bitcoin or Ethereum
• Examples include Meta Mask, Trust Wallet, Ledger Live, Trezor

Hot vs Cold Wallets

• Hot Wallets: connected to the internet, easily accessed, easier for beginners and regular traders.
• Cold Wallets: not connected to the internet, secure storage for large amounts, ideal for long-term crypto storage.

Asset Tokenization

• Asset tokenization represents real-world assets as digital tokens on a blockchain.
• Examples include equities, currencies, bonds, credit, real estate, art, commodities.

Tokenization Benefits

• Increased liquidity
• Enhanced accessibility
• Transparency and security
• Cost efficiency

Market Size

• Asset tokenization is estimated to reach $16.1 trillion by 2030 (Boston Consulting Group).

Portfolio Management

• Strategies evolve with market trends and sentiment
• Key considerations in portfolio management include Bitcoin halving, macro factors (inflation, rate hikes, geopolitics), and risk management (dealing with volatility, regulatory risks, and liquidity risks).

Risk Management

• Asset managers must closely monitor and anticipate risks associated with crypto assets.
• Risks include volatility risk, regulatory risk, security risk, liquidity risk, custodial risk, and market sentiment risk.

This quiz explores the essential concepts of asset management including strategies, types of asset managers, and the importance of diversification. Test your understanding of active vs passive management, growth vs value investing, and other key principles in increasing wealth through investments.