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What Does Portfolio Management Mean?
The art and science of making decisions about investment mix and policy, matching investments to
objectives, asset allocation for individuals and institutions, and balancing risk against performance.
Portfolio management is all about strengths, weaknesses, opportunities and threats in the choice of debt
vs. equity, domestic vs. international, growth vs. safety, and many other tradeoffs encountered in the
attempt to maximize return at a given appetite for risk.
Investopedia explains Portfolio Management
In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management:
passive and active. Passive management simply tracks a market index, commonly referred to as indexing
or index investing. Active management involves a single manager, co-managers, or a team of managers
who attempt to beat the market return by actively managing a fund's portfolio through investment
decisions based on research and decisions on individual holdings. Closed-end funds are generally
actively managed.
What Does Hedge Fund Mean?
An aggressively managed portfolio of investments that uses advanced investment strategies such as
leveraged, long, short and derivative positions in both domestic and international markets with the goal of
generating high returns (either in an absolute sense or over a specified market benchmark).
Legally, hedge funds are most often set up as private investment partnerships that are open to a limited
number of investors and require a very large initial minimum investment. Investments in hedge funds are
illiquid as they often require investors keep their money in the fund for at least one year.
Investopedia explains Hedge Fund
For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated
investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they
must earn a minimum amount of money annually and have a net worth of more than $1 million, along with
a significant amount of investment knowledge. You can think of hedge funds as mutual funds for the
super rich. They are similar to mutual funds in that investments are pooled and professionally managed,
but differ in that the fund has far more flexibility in its investment strategies.
It is important to note that hedging is actually the practice of attempting to reduce risk, but the goal of
most hedge funds is to maximize return on investment. The name is mostly historical, as the first hedge
funds tried to hedge against the downside risk of a bear market by shorting the market (mutual funds
generally can't enter into short positions as one of their primary goals). Nowadays, hedge funds use
dozens of different strategies, so it isn't accurate to say that hedge funds just "hedge risk". In fact,
because hedge fund managers make speculative investments, these funds can carry more risk than the
overall market.
A private investment fund with a large, unregulated pool of capital, managed by experienced investors.
These funds use a range of sophisticated strategies to maximise returns – including hedging, leveraging
and derivatives trading.
If debt is cheaper than equity why do companies approach the equity markets?
Well in any organization there needs to be a mix of financing sources, so even though you will choose
debt over equity, in some instances to satisfy some interest parties equity must be used. So there lies
your answer. there is no text book answer. it is more practical.
The major reasons are:

•Though debt is cheaper it is more riskier. Because there is an obligation to pay back the interest on debt
and debt amount irrespective of making profit or loss. But dividends to the equity shareholders will be
distributed only if company makes profit.
•Raising huge capital is not possible only by going for debt.
•By going to equity not only firms raise huge amount of capital in a short period but also they can spread
the risk of doing business.
•Equities are expensive because the expectation of shareholders is more as they are taking more risk.
•The market value of the equity rises if the business does well and has a robust future outlook. This leads
to the promoter holding also multiplying in value though it is notional to a great extent. In times of need
the promoter can sell part stake in the business by offloading 5-10% equity to raise cash. The same cant
be said about debt
Assets under Management - AUM
What Does Assets Under Management - AUM Mean?
The market value of assets that an investment company manages on behalf of investors. Assets under
management (AUM) is looked at as a measure of success against the competition and consists of
growth/decline due to both capital appreciation/losses and new money inflow/outflow.
Investopedia explains Assets Under Management - AUM
There are widely differing views on what "assets under management" refers to. Some financial institutions
include bank deposits, mutual funds and institutional money in their calculations; others limit it to funds
under discretionary management, where the client delegates responsibility to the company.
Fund Manager
What Does Fund Manager Mean?
The person(s) resposible for implementing a fund's investing strategy and managing its portfolio trading
activities. A fund can be managed by one person, by two people as co-managers and by a team of three
or more people. Fund managers are paid a fee for their work, which is a percentage of the fund's average
assets under management.
Also known as an "investment manager".
Investopedia explains Fund Manager
The individuals involved in fund management (mutual, pension, trust funds or hedge funds) must have a
high level of educational and professional credentials and appropriate investment managerial experience
to qualify for this position. Investors should look for long-term, consistent fund performance with a fund
manager whose tenure with the fund matches its performance time period.
The whole point of investing in a fund is to leave the investment management function to the
professionals. Therefore, the quality of the fund manager is one of the key factors to consider when
analyzing the investment quality of any particular fund.

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What Does Portfolio Management Mean?

Investopedia explains Portfolio Management

What Does Hedge Fund Mean?

Investopedia explains Hedge Fund

The major reasons are:

•Raising huge capital is not possible only by going for debt.

Assets under Management - AUM

What Does Assets Under Management - AUM Mean?

Investopedia explains Assets Under Management - AUM

What Does Fund Manager Mean?

Also known as an "investment manager".

Investopedia explains Fund Manager

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