Investment Banking and Investment Management

Investment Banking and Investment Management


Before knowing the investment banking and investment management, let’s understand the meaning of investment and investing.

Investment is the act of allocating resources, usually money, with the expectation of generating an income or profit.

Investing is the process of buying assets that is expected to increase in value over time and provide returns in the form of income payments or capital gains. Investing, on the other hand can also be about spending time or money to improve own life or the lives of others.

From the financial point of view, investing is the purchase of securities, real estate and other assets/items of value in the pursuit of capital gains or income.

What is Investment management?

  • Investment management deals with investment decisions and asset allocation.
  • Investment managers (individuals or organizations) handle activities related to financial planning, investing, and managing a portfolio for their clients. They devise strategies and execute trades within a financial portfolio. Here clients can be individual or institutional investors.
  • Thus, Investment managers help clients reach their investment goals by managing their money.

Function of Investment Managers

  • Like Asset managers, investment counsellors, portfolio managers, and wealth managers; investment managers are also a type of investment advisors.
  • They help clients (individuals, educational institutions, insurance companies, and pension funds) by managing their money.
  • Perform financial analysis, portfolio allocation between bonds and stocks, equity research, and issue buy and sell recommendations.

What is Investment Banking?

  • Investment bankers, by contrast, work as high-level consultants and analysts for large companies to help with capital raising strategies. They help with corporate finance needs, such as raising funds or capital.
  • Investment banking can involve equity and security research and making buy, sell, and hold recommendations.
  • Investment banking firms are also market makers, which provide liquidity or connect buyers and sellers to “make” the market.
  • Companies and governments hire investment bankers to facilitate mergers and acquisitions as well as IPOs, and new debt issuance such as a bond offering.

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