Investment management

Investment management typically refers to overseeing investment funds, often specialising in areas such as private and public equity, real assets, alternative assets, and bonds, with a focus on optimising returns and mitigating risks for investors.
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3 min
19-February-2025

Managing your money wisely goes beyond just saving it in a bank—it's about making your money work for you. That's where investment management comes in. Whether you're planning for retirement, building a college fund, or just aiming to grow your wealth, this process helps align your investments with your financial goals. In this article, we'll break down what investment management really means, how it works, and why it plays such a vital role in shaping your financial future. We’ll also touch upon real-life examples, including mutual funds, and walk through both the pros and cons so you can make better-informed decisions—whether you’re going solo or seeking professional guidance.

For investors who want structured growth and professional oversight without managing every asset themselves, mutual funds serve as an ideal gateway. These funds offer diversified portfolios, expert handling, and strategic allocation all under one digital roof. Explore Top-Performing Mutual Funds!

What is investment management?

At its core, investment management is about making smart decisions with your money—consistently and strategically. It involves selecting and managing a collection of investments like stocks, bonds, or mutual funds to meet specific goals. This could be anything from buying a home to saving for retirement. What sets investment management apart is its ongoing nature. It’s not a one-time action but a continuous process where your investments are reviewed and rebalanced based on market trends and personal goals. While many people rely on experienced fund managers, some prefer to manage their own portfolios with the help of digital tools and research. Either way, the focus remains the same: optimising returns while managing risk effectively. For those who prefer expert-led financial decisions without hiring a full-time investment manager, mutual fund platforms offer a simplified yet effective path to portfolio growth and risk alignment. Compare Mutual Fund Options Now!

An example of investment management

Let’s take mutual funds as a practical example. When you invest in a mutual fund, you're pooling your money with others under the care of a professional fund manager. This manager then invests that pool across different assets like shares, debt securities, or even real estate—based on the fund’s strategy.

For instance, if a mutual fund is designed to target high-growth tech companies, the manager will focus on buying stocks in that sector. They’ll keep an eye on market movements, tweak the portfolio as needed, and work to deliver returns in line with the fund’s objective. As an investor, you get access to expert management without needing to monitor every stock yourself. That’s the real value of investment management it takes the complexity off your plate while keeping your money in motion.

How does investment management work

Think of investment management like building and maintaining a well-oiled machine. The process starts with identifying your financial goals—whether it's saving for your child’s education or planning early retirement. Next, your risk tolerance and time horizon are assessed to create a personalised investment plan.

Once that’s clear, the manager (or you, if you're doing it solo) chooses the right mix of assets—like equities, bonds, or even real estate. But it doesn't end there. The portfolio needs regular tracking and tweaking to match changing market conditions or life goals. The idea is to stay on course while making the most of every opportunity.

The objective of investment management

The end goal of investment management is pretty straightforward: grow your wealth without taking unnecessary risks. But getting there isn’t just about picking “high return” investments. It's about building a portfolio that balances growth and safety.

A good investment strategy focuses on helping you achieve your personal financial milestones—whether that’s buying your first home, travelling the world, or retiring comfortably. To do this, investment management uses tools like diversification, asset allocation, and sometimes even hedging strategies to limit downside risk. In short, it’s about making your money work smart, not just hard. Mutual funds are specifically designed to strike this balance—optimising returns while spreading out risk through built-in diversification and professional oversight. Compare Mutual Fund Options Now!

The process of investment management

Investment management isn’t a one-size-fits-all approach—it’s a thoughtful step-by-step process that adapts to your needs. Here's how it typically unfolds:

1. Determining your goals: First, you need clarity on what you want to achieve—short-term goals like buying a car or long-term ones like building retirement wealth. This sets the tone for your entire strategy.

2. Creating a plan: Once your goals are defined, it’s time to build a strategy. If you’re aggressive and aiming for higher returns, an active investment plan might suit you. If you prefer a hands-off approach, passive strategies like index funds may work better.

3. Choosing the investments: Now comes asset selection. Younger investors might favour equities or mutual funds for long-term gains, while those nearing retirement may lean towards safer options like debt funds or FDs.

4. Monitoring your investments: Just choosing the right assets isn’t enough. You need to monitor them regularly, track their performance, and understand how external events like inflation or interest rate changes may affect them.

5. Rebalancing when needed: As your portfolio grows and market conditions evolve, your original asset mix may shift. Rebalancing helps reset the balance so your portfolio continues to reflect your intended risk and return profile.

If you're looking for a structured, step-by-step approach to managing your investments, mutual funds offer a pre-designed roadmap—from goal setting to rebalancing—backed by SEBI-regulated fund managers. Start Investing or SIP with Just Rs. 100!

Types of investment management

Investment management isn’t just about putting your money in a few stocks and hoping for the best. There are different flavours depending on what kind of assets you're dealing with and your risk appetite.

  1. Traditional investing: This is your classic route stocks, bonds, gold, and other conventional instruments. It’s familiar, time-tested, and still popular among many investors.

  2. Mutual funds: Here, professionals manage a pool of money collected from investors. They decide what to invest in, when to rebalance, and how to maximise returns—perfect for those who want expert help.

  3. Hedge funds: These are more aggressive. They use smart, high-risk strategies to seek big returns, but they're usually meant for high-net-worth individuals or institutional investors.

  4. Real estate investing: It’s not just about owning physical property anymore—this can also include REITs (Real Estate Investment Trusts), which let you invest in property markets with smaller capital.

  5. Private equity: This focuses on buying shares of private, non-listed companies. The aim? Long-term growth. It often requires a large capital commitment and patience.

  6. Quantitative investments: If you're into data and algorithms, this one’s for you. It's all about using models and analytics to find opportunities before others spot them.

  7. Cryptocurrency and alternatives: Think digital coins, collectibles, bullion or even fine art. These are unconventional but rising in popularity, especially among younger investors.

  8. Portfolio management: This is the umbrella term for managing a mix of different investments across types and sectors, usually to maintain an ideal balance of risk and return.

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Importance of investment management

You work hard to earn your money so shouldn’t your money work equally hard for you? That’s the basic promise of investment management. In a country like India, where inflation slowly eats away at idle savings, investing becomes a necessity, not a luxury.

Good investment management helps you build wealth over time. But more importantly, it empowers you to meet life goals: buying a house, sending your child abroad, or retiring with dignity. And beyond personal growth, strategic investments fuel economic development and uplift communities especially when tools like SIPs or mutual funds are used to make investing more accessible. For families, investment management also supports generational wealth transfer. It's not just about you it’s about securing your legacy.

Advantages of investment management

There are some clear perks to having a well-managed investment plan, especially if you're looking for a balance between growth and security. Here are the top benefits:

  • Expertise on your side: Professionals know how to read markets and make informed decisions.

  • Lower risk: Through diversification and smart asset allocation, your portfolio becomes more resilient to market swings.

  • Dynamic strategies: Your plan isn’t set in stone—it evolves as the market changes, helping you capture opportunities.

  • Access to exclusive investments: Some strategies or funds are only available through professional channels.

  • Personalised approach: Your investment manager aligns everything to your goals, risk tolerance and time frame.

  • Ongoing adjustments: Frequent rebalancing ensures your investments stay on track, no matter what happens in the market.

Disadvantages of investment management

While investment management has its benefits, it’s not without a few drawbacks especially if you're not careful.

  • Less control: When you hire someone to manage your investments, you’re handing over the reins. This means you might not always agree with the decisions made.

  • Potential conflicts: Not all investment managers are created equal. Some may prioritise their commissions or firm’s interests over yours.

  • Fees can eat into returns: Professional advice isn’t free. Over time, management fees and other charges can reduce your overall earnings, especially if returns are average.

  • Finding the right fit: Not every manager suits your goals. It can take time and effort to find someone who truly understands your financial journey.

An overview of the investment management industry

The investment management industry today is more dynamic than ever. It’s no longer just about stock-picking or timing the market. Instead, it's about offering customised, tech-driven solutions to a wide range of investors—from high-net-worth individuals to everyday savers.

Managers today do more than just move money around. They analyse markets, create strategies, adapt to trends like ESG (Environmental, Social, and Governance) investing, and tap into the rise of AI and automation. At the same time, passive investing through index funds and ETFs is also gaining popularity, thanks to its low costs and consistent performance.

This industry is evolving to meet the growing demands of a more aware and diverse investor base—especially in a country like India, where digital adoption is skyrocketing.

What does an investment manager do

An investment manager wears many hats and they all point toward helping you meet your financial goals with less stress.

  • They start with the basics: understanding your income, risk tolerance, life plans, and investment horizon. From there, they build a tailored plan to match your needs.

  • They keep an eye on your portfolio, rebalance it periodically, watch the markets closely, and respond quickly to changes. They research new opportunities, evaluate risks, and help you avoid common investment traps.

  • Think of them as your financial GPS. They help you navigate twists and turns in the economy so your money stays on track.

You do not always need a dedicated fund manager to get this level of service. Mutual fund schemes already embed professional fund management and rebalancing without you lifting a finger. Explore Top-Performing Mutual Funds!

Key takeaways

Here’s a quick wrap-up of what we’ve covered:

  • Investment management is about aligning your assets with your financial goals, time horizon, and risk tolerance.

  • It involves a series of steps—setting goals, creating strategies, choosing investments, monitoring performance, and rebalancing when needed.

  • Professional expertise, diversification, and strategy adjustment help reduce risks and increase returns.

  • Good investment management can bridge wealth gaps, protect against inflation, and help build long-term financial security.

Conclusion

Investment management isn’t just for the ultra-rich or seasoned traders. In today’s complex financial world, having a structured plan for your money is essential no matter your income level. While some investors might thrive doing it themselves, others may benefit from hiring an expert to fine-tune strategies, minimise risks, and identify opportunities.

If long-term wealth creation is your objective, investing in mutual fund schemes may just be the right way to go. The Bajaj Finserv Mutual Fund Platform hosts over 1,000 funds across different categories. You can also compare mutual funds across different key metrics to determine what suits you best. The platform also has several useful tools, such as a SIP calculator and a lump sum calculator, to help you plan your investments better.

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Frequently asked questions

What is investment management and how does it work?
Investment management involves managing various financial securities and assets to achieve specific financial goals. It requires careful analysis, planning, implementation and monitoring of different investment strategies tailored to your objectives.
What does an investment manager do?
An investment manager helps investors construct and manage asset portfolios. They also conduct financial analyses and take appropriate steps to optimise returns and manage risks.
Who is an investment manager?
An investment manager is a financial market professional experienced in the art of managing investment portfolios. They are responsible for managing financial assets, making investment decisions on behalf of investors and providing investment advice.
What are the various types of investments?
Stocks, bonds, mutual funds, commodities, real estate, bank deposits, Public Provident Funds (PPFs), Unit-Linked Insurance Plans (ULIPs), private equity and hedge funds are some of the common types of investments.
How do I plan an investment?
To plan an investment, you must first determine your financial objectives, risk tolerance and time horizon. Then, conduct thorough research into the various investment options available and invest in a diversified set of assets that match your objectives, horizon and risk tolerance.
What is the main goal of investment management?

The main objective of investment management is to generate returns that align with the client’s financial goals while considering their risk tolerance.

What is the scope of investment management?

Investment management encompasses portfolio management, asset allocation, risk analysis, and performance monitoring. Its scope is broad, covering the management of diverse financial assets and investment strategies.

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Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.