In early period of development of fund as a job, i.e., before the early 1950s, investment management was mainly concerned with the procurement of funds. The subject matter was primarily restricted to financial problems arising during episodic events like incorporation, merger, consolidation and reorganization. Thus, the original position of the financial planner manager was to improve outwardly the resources required by joint inventory companies. The inner administration of fund was possibly ignored or managed by the promoter entrepreneur himself.
With the passage of time, the role of investment manager has undergone drastic changes. Currently, the investment supervisor is in control of deciding the full total quantity of capital necessary for both short-term (working capital) and long-term (fixed capital). That is performed by appropriate forecasting and planning of finance. Secondly, their work profile includes trading the resources in assets and jobs, with desire to of earning profits. This is to be done in such a way that the earnings tend to be more than the price therefore that there surely is a confident net return to the concern.
Now the investment manager is concerned with the management of assets, increasing and allocation of money, and valuation of the firm. Besides, he has to ensure the supply of resources to any or all parts of the corporation, consider the financial performance, negotiate with bankers, financial institutions and different vendors of credit, and keep an eye on stock trade quotations and the behavior of inventory price.
In a company enterprise, finance is the joining url of all the practical parts such as for instance creation, personnel and advertising, so the management of finance is crucial to the easy efficiency of the organization. The basic financial procedures are investment , which relates to acquisition of set assets; financing, which deals with raising expected funds from numerous options; and gain appropriation, which relates to appropriating the profit gained by the enterprise among the providers of funds.
Regarding investment , assets/ jobs should be picked just by contemplating their net returns. Regarding financing, it will be ensured that the company gets the mandatory financing at the cheapest probable cost. Likewise, regarding income appropriation it is to be observed that adequate funds are supplied for the developing activities of the enterprise, without impairing the fascination of the suppliers.
In a strong wherever these procedures are planned and managed precisely it could be stated that there exists effective investment management. Hence, investment management may be defined as that section of managerial task which is concerned with the planning and controlling of the financial assets of a firm.
As every company activity involves opportunities, investment management is closely related with other aspects of management. When investment is maintained correctly, areas will also show good performance. Investment management helps in monitoring the powerful arrangement of funds in fixed and working capital. This can, consequently, ensure greater working of the enterprise.
All of the operations and assets in a company company are managed with exactly the same broad goal, i.e., to attain the aim of the enterprise. So each reference or area should really be maintained in such a way as to subscribe to the achievement of the objective of enterprise. Nevertheless, there are specific objectives for each functional area. In the case of investment , the target is to ensure that the firm obtains the necessary fund at the best possible cost, and uses it in the most useful way.
To enjoy his role effectively the investment supervisor has different instruments, such as cost of money, control, capital budgeting, functioning capital management methods and account flow analysis/cash flow analysis. Cost of capital assists in determining the correct supply of finance. Usually the resources with minimal charges are picked, so the measured average price of money could be held to a minimum. Money budgeting assists in choosing the appropriate investment mix; the accessible methods must be utilized in probably the most profitable way. For this reason, suitable projects should really be picked from substitute programs by utilizing money budgeting techniques.