ASSET MANAGEMENT

We cannot even begin to scratch the surface of the world of asset managers. Funds are managed across an almost infinite array of investment approaches, types of assets, geographical scope, risk levels, etc. The best thing to do is to plunge into the websites of some of the most well-known asset managers.

. JPMorgan Funds [see].

. Vanguard [see].

. Carmignac Gestion [see].

. Pricing I. 1) Management fee: annual fee charged by the asset manager to the fund; 2) Performance fee: fee charged when and if the fund exceeds its benchmark; 3) Operational expenses: commissions on trading, custody fees, etc.; 4) Exit fee: charged by some mutual funds when an investor sells shares within a specified, usually short, period of time; 5) Sales charge: a one-off fee paid by investors to the broker that sells the fund. JPMorgan allows sales charges ranging from 4.5%.

. Pricing II. Average management fee for equity funds: 0.82% (index-tracking), 1.77% (actively managed). Average management fee for fixed-income funds: 0.49% (index-tracking), 1.00% (actively managed). See also the very interesting Vanguard tool for comparing costs.

. Benchmarks. Some of the most widely used benchmarks are MSCI—Morgan Stanley Capital International is a leading global provider of domestic and international indexes; Russell—Offers an innovative methodology that has helped its indexes become widely used benchmarks; Standard & Poor's—One of the nation's foremost providers of indexes and financial data, Standard & Poor's (S&P) now has more than 200 indexes; FTSE—Financial Times Stock Exchange. Some funds have an absolute-return orientation, which means that it they aer not managed relative to an index.

 . Active management. Active investors believe that they are able to consistently identify enough high-performing investments to ultimately achieve better than average results. Active investors seek out what they consider to be better than average opportunities. Bottom-up or top-down selection approach. Most are long-only, though some funds allow for long and short positions [see].

. Passive management. Full replication of a benchmark index. Every stock in the portfolio is held at its exact weight. No market timing; no stock picking in search of mispriced securities [VIDEO: BOOK] [VIDEO]. Richard Ferri: The Power of Passive Investing: More Wealth with Less Work. New York: John Wiley & Sons, 2011.

. Growth. Growth funds seek companies that have strong earnings growth potential; process combines research, valuation and stock selection to identify companies that have a history of, or future potential for, above-average growth.

. Income. Income funds invest in income-producing securities, including debt and equity securities (didivend-paying companies). See Barron's Income Investing Blog.
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