Money Management

Money Management

Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans. Money management broadly refers to the processes utilized to record and administer an individual's, household's, or organization's finances. Global investment managers offer retail and institutional investment management funds and services that encompass every investment asset class in the industry. Investment company money management offers individual consumers investment fund options that encompass all investable asset classes in the financial market. Investment company money managers also support the capital management of institutional clients, with investment solutions for institutional retirement plans, endowments, foundations, and more.

Money management broadly refers to the processes utilized to record and administer an individual's, household's, or organization's finances.

What Is Money Management?

Money management refers to the processes of budgeting, saving, investing, spending, or otherwise overseeing the capital usage of an individual or group. The term can also refer more narrowly to investment management and portfolio management.

The predominant use of the phrase in financial markets is that of an investment professional making investment decisions for large pools of funds, such as mutual funds or pension plans.

Money management broadly refers to the processes utilized to record and administer an individual's, household's, or organization's finances.
Financial advisors and personal finance platforms such as mobile apps are increasingly common in helping individuals manage their money better.
Poor money management can lead to cycles of debt and financial strain.

Understanding Money Management

Money management is a broad term that involves and incorporates services and solutions across the entire investment industry.

In the market, consumers have access to a wide range of resources and applications that allow them to individually manage nearly every aspect of their personal finances. As investors increase their net worth, they also often seek the services of financial advisors for professional money management. Financial advisors are typically associated with private banking and brokerage services, offering support for holistic money management plans that can involve estate planning, retirement, and more.

In the growing financial technology market, personal finance apps exist to help consumers with nearly every aspect of their personal finances.

Investment company money management is also a central aspect of the investment industry. Investment company money management offers individual consumers investment fund options that encompass all investable asset classes in the financial market.

Investment company money managers also support the capital management of institutional clients, with investment solutions for institutional retirement plans, endowments, foundations, and more.

Top Money Managers by Assets

Global investment managers offer retail and institutional investment management funds and services that encompass every investment asset class in the industry. Two of the most popular types of funds include actively managed funds and passively managed funds, which replicate specified indexes with low management fees.

The list below shows the top 5 global money managers by assets under management (AUM) as of Q1 2021:

BlackRock Inc.

In 1988, BlackRock Inc. was launched as a $1 division of the BlackRock Group. By the end of 1993, it boasted $17 billion in AUM and, by 2020, that number swelled to a whopping $8.68 trillion. BlackRock's exchange traded fund (ETF) division, called iShares, has more than $2 trillion in AUM globally, amounting to roughly a quarter of the group's total assets. Overall, the firm employs approximately 13,000 professionals and maintains offices in more than 30 countries around the world.

The Vanguard Group

The Vanguard Group is one of the most well-known investment management companies, catering to over 30 million clients across 170 countries. Vanguard was founded by John C. Bogle in 1975, in Valley Forge, Pennsylvania, as a division of Wellington Management Company, where Bogle was previously chair. Since its launch, Vanguard has grown its total assets to beyond $7 trillion, becoming the world's second-largest asset manager thanks to the popularity of its low-cost investment funds.

Fidelity Investments

Fidelity Management & Research Company was founded in 1946 by Edward C. Johnson II. As of Dec. 2020, Fidelity had more than 35 million customers with $9.8 trillion in total assets and $4.9 trillion in AUM. The firm offers hundreds of mutual funds, including domestic equity, foreign equity, sector-specific, fixed-income, index, money market, and asset allocation funds.

Global asset management firm Pacific Investment Management Company LLC (PIMCO) was co-founded in 1971, in Newport Beach, California, by bond king Bill Gross. Since its inception, PIMCO has grown its AUM to $2.21 trillion. The firm houses over 775 investment professionals, each averaging 14 years of investment experience. With over 100 funds under its banner, PIMCO is widely regarded as a leader in the fixed income sector.

Invesco Ltd.

Invesco Ltd. has been offering investment management services since the 1940s. In February of 2021, the firm announced that it had $1.35 trillion in AUM, across its 100-plus mutual fund products. Invesco also offers over 100 ETFs through its Invesco Capital Management LLC division.

Related terms:

Asset

An asset is a resource with economic value that an individual or corporation owns or controls with the expectation that it will provide a future benefit. read more

Asset Management Company (AMC)

An asset management company (AMC) invests pooled funds from clients into a variety of securities and assets. read more

Asset Class

An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. read more

Asset Management

Asset management is the practice of increasing wealth over time by acquiring, maintaining, and trading investments that can grow in value. read more

Assets Under Management – AUM

Assets under management (AUM) is the total market value of the investments that a person (portfolio manager) or entity (investment company, financial institution) handles on behalf of investors. read more

Endowment

An endowment is a nonprofit's investable assets, which are used for operations or programs that are consistent with the wishes of the donor(s). read more

Exchange Traded Fund (ETF) and Overview

An exchange traded fund (ETF) is a basket of securities that tracks an underlying index. ETFs can contain investments such as stocks and bonds. read more

Financial Advisor

What does a financial advisor do? Read our complete guide before hiring a financial advisor to ensure that you choose the best financial advisor for your specific needs. read more

Financial Markets

Financial markets refer broadly to any marketplace where the trading of securities occurs, including the stock market and bond markets, among others. read more

Fixed Income & Examples

Fixed income refers to assets and securities that bear fixed cash flows for investors, such as fixed rate interest or dividends. read more