It's the amount of dough the money manager manages. Why does it matter? Because the fees that the manager earns are based on the size of those assets.
And the public market investing business really scales...that is, if a company is managing 20 billion dollars and has 40 analysts and employees and charges 1% average fee, they are charging $200 million a year to manage that money. Then the market goes up and some more money comes in and a year later, they're managing 30 billion. Their fee might go down to 0.9% on that next 10 billion so the average fee income might be like a shade under $300 million. And yet they still have 40 analysts and employees. HUGELY more profitable, the more assets there are under management.
Nice work if you can get it...and are good at it.
Related or Semi-related Video
Finance: What is a Diversified Mutual Fu...20 Views
finance a la shmoop what is a diversified mutual fund? all right people
listen up it's lots of investments stocks bonds exposure to risk and reward [Risk and reward punch man in face]
everywhere energy, telecom, insurance, real estate, banking, chemicals, tech, retail not
enough diversity yet well those are just sectors or industries and there's a
whole bunch of them what about geography geographic diversity the US, Russia, China
Europe someday maybe Mars Elon what do you think well maybe exposures to [Elon Musk floating in space]
different currencies or commodities cycles as the diversity you seek hmm
well that's diversity Benetton eat your heart out so the bigger question is why
would you want such diversity? well the idea is that you mitigate risk by being
diverse the don't put all your eggs in one basket thing if one investment goes [Value of investment graph appears]
bust well at least you have plans B C and D to fall back on and if this is
grabbing you check out our videos on efficient markets theory for more on the
subject or maybe diversify your knowledge and watch all of our finance
videos food for thought and you know please click on the ads that we got to [Man holding begging sign]
eat around here
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