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What does an Asset Manager do?
Research & Advisory / 7 October 2016

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Olaf Stotz
Professor of Asset Management
Professor Dr. Olaf Stotz holds a Professorship of Asset Management since September 2008. Diploma in Industrial Engineering and Management from University of Karlsruhe in 1995. MSc in Corporate and International Finance from University of Durham/ UK in 1996. Between 1996 and 2001 Mr. Stotz worked in the financial services industry. His last position at the institutional Asset Management Devision of Union Investment involved the responsibility for equity and portfolio research and the management of the product development team. Between 2002 and 2003 he worked as a research associate at the University of Aachen (chair of Prof. Dr. Rüdiger von Nitzsch). PhD in Finance in 2003 on "Active Portfolio Management based on Mispricings in Risk Premia". His PhD thesis was awarded by the 1st price of the "Deutsches Aktieninstitut" and the "Acatis Value Preis". Between 2003 and 2008 Mr. Stotz was assistant professor of Finance at the University of Aachen. He finished his Habilitation (Venia Legendi in Economics and Business Administration) in 2008 ("Essays on Financial Markets"). The research interests of Mr. Stotz are Asset Management, Empirical Finance, Asset Pricing, and Behavioral Finance. His research has been published by various academic journals, has been discussed in the financial press and is applied in the financial industry.

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Asset management is the administration of assets. Depending on the investor’s goals and their willingness to take risks, an asset manager compiles a portfolio. Security papers, that promise a high return are usually rather risky.

A skilled asset manager thus should create a portfolio which balances out an appropriate level of risk with suitable returns.
This task can be compared to the work a chef does when assembling a multiple course menu for his guests.
The chef will purchase the necessary ingredients at a food market – the asset manager procures security papers from the capital market.
He needs to consider and incorporate his client’s willingness to take risks – the chef on the other hand needs to cater to his guest’s tastes.

Too little salt is just as detrimental as too much of it. While the chef is able to check his dishes by tasting them, the asset manager has to go to greater lengths to verify his portfolio.
Possible returns as well as risks refer to the future. Here, complex political, economical or psychological factors have to be taken into account.

Assessing these is what makes asset management interesting and challenging in the present, it’s results and quality may only be experienced in the future, though.

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