Difference Between Private Equity and Asset Management

What Is Asset Management?

What Is a Private Equity Firm?

Difference Between Asset Management and Private Equity

Though in most cases private equity vs asset management seems similar, they significantly differ in their methods of operations.

Parameters

Asset Management

Private Equity

Investment timeframe

Invests for a comparatively shorter timeframe

These firms usually invest for a longer timeframe, i.e. for a period of 3 to 10 years.

Caters to

They deliver value to both large and small organisations, insurance companies, pension fund organisations, government institutions, and high-net-worth individuals.

They usually cater to struggling companies.

Focuses on

An asset management company usually focusses on everything about the personal finance of its clients.

A private equity firm focusses mainly on the investment made by their clients.

Investments made by them

They never make investments primarily but do it on behalf of their clients.

They make investment in companies as primary investors.

Stated goal

Helps the clients in achieving asset appreciation.

Acquires capital from wealthy investors and provides them with a profit within the mentioned timeframe.

Flexibility

An asset manager is usually liable to hold on to an asset, usually between three to six months.

As they manage their assets directly, they are more flexible in terms of when they can make exit from their investments.

Nature of investment

Investments made under asset management are quite diversified.

Investments made under private equity possess a higher level of control.

How Does an Asset Management Company Work?

What Is the Fee Structure of Asset Management Professionals?

How Does a Private Equity Firm Work?

What Is the Fee Structure of a Private Equity Firm?

Private Equity Vs Asset Management: Which Is Better for Whom?

FAQs on Private Equity vs Asset Management

Is it possible to go into private equity from asset management? up-arrow

Yes, it is possible for one to go into private equity investment from asset management. This is because private equity is nothing but one of the investment strategies utilised in asset management for growing and managing the resources and assets of their clients.

What are the similarities between private equity and asset management? up-arrow

The similarities between private equity and asset management are as follows:

  • Both of them aim to make returns on their investments
  • Both focusses on managing investments
  • They both make investments with the goal of making huge profits for their clients.

Does asset management mean the same as private equity? up-arrow

Though both private equity and asset management are methods of growing the financial portfolio of a client, the former is actually a type of asset management. In fact, asset management, being a broad term, encompasses various strategies that ensure significant growth in the portfolio of their clients.

Name the four tools of asset management. up-arrow

The four tools of asset management are as follows:

  1. Reliability-based monitoring and analysis
  2. Time-based monitoring and analysis
  3. Condition-based monitoring and analysis
  4. Predictive monitoring and analysis