Asset Management Fundamentals

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Questions and Answers

What is the primary goal of asset management?

Maximizing short-term gains

Avoiding all forms of risk

Increasing total wealth over time (correct)

Minimizing expenses on investments

Which type of asset manager typically uses automated algorithms to manage investments?

Investment broker

Robo-advisor (correct)

Financial advisor

Registered Investment Advisor

Which fee is commonly charged by asset managers based on the performance of an investment?

Performance fee (correct)

Custody fee

Transaction fee

Management fee

How does diversification benefit an asset manager's portfolio?

It reduces risk by spreading investments. Signup and view all the answers

What distinguishes active management from passive management strategies?

Active management seeks to outperform the market. Signup and view all the answers

What is one primary function of a cryptocurrency/web3 wallet?

To store unique digital codes for sending and receiving crypto assets Signup and view all the answers

Which of the following is NOT a feature commonly associated with decentralized exchanges (DEX)?

Brokerage services Signup and view all the answers

What distinguishes real-world asset tokenization from digital asset tokenization?

Real-world asset tokenization includes assets like currencies, bonds, and art. Signup and view all the answers

Which of the following is NOT considered a benefit of the tokenization process?

Increased fraud risk Signup and view all the answers

What is the estimated market size for tokenized illiquid assets by 2030?

$16.1 trillion Signup and view all the answers

What is one strategy for managing digital assets in Crypto Asset Management?

Dollar Cost Averaging (DCA) Signup and view all the answers

Which of the following is NOT a type of fund used by asset managers?

Real estate funds Signup and view all the answers

What is one of the main pros of asset management?

Expertise and knowledge Signup and view all the answers

What kind of diversification involves investing in different geographical areas?

Geographic diversification Signup and view all the answers

Which strategy is commonly associated with managing cryptocurrency investments?

Staking Signup and view all the answers

What is a primary characteristic of Centralized Exchanges (CEX)?

Requires online registration and KYC checks Signup and view all the answers

What is a potential disadvantage of asset management?

Cost/Fees Signup and view all the answers

Which of the following is an online platform for trading NFTs?

OpenSea Signup and view all the answers

Study Notes

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.

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Description

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.