As economies grow they accumulate wealth that is held in real or financial assets. The role of financial markets is to price these assets in a way that provides incentives to create more of those real assets that the economy needs most. Owners of financial assets need to manage them so that the returns they generate are as high as possible but not too risky. Identifying the factors that drive asset returns and managing their risks are therefore at the center of asset management. In addition to traditional asset management, risks can be managed using insurance contracts. Hence, asset management should not be viewed in isolation but needs to also consider insurance solutions.
Exemplary project: Behavioral Finance and Inefficient Markets (T. Hens)
While by and large investors are rational and markets are efficient, recent results in behavioral finance have identified a number of investment mistakes that generate market inefficiencies and the opportunity to earn abnormally large returns. One example is that investors can earn higher returns by investing in a contrarian way, i.e. by buying assets when most other investors sell and selling when most others buy. The contrarian style is most successful following extreme situations such as market crashes due to mega shocks (9/11, Fukushima). However, not running with the herd is psychologically difficult. In a sense, the extra return can be viewed as compensation for the psychological risk of being an outsider. These results are important as they question the well-functioning of asset management and financial markets at large. The project studies international differences in investors' willingness to invest in a contrarian way. First results reveal that these differences can be attributed to cultural factors and that differences in asset prices across countries can be explained by cultural differences.
Selected research projects
- Capital Adequacy, Valuation, and Portfolio Selection for Insurance Companies (E. Farkas)
- IAAPD - Interaction of Agents and Asset Price Dynamics (E. Farkas)
- Risk-Based Commodity Investing (M. Leippold)
- Cultural Differences in Asset Prices (T. Hens)
- Evolutionary Finance with Focus on Asset Pricing (T. Hens)
- The Return and Risk from Investing in Futures Options (A. Ziegler)
Connections to courses
Courses related to Asset Management help students to broaden and deepen their understanding of state-of-the art investment strategies and techniques, and to gain insights into the latest trends and ideas of the financial industry. Students acquire knowledge not only of the theory of investment and financial risk management, but also in areas such as the foundations of capital markets, the analysis of market fundamentals, regulation and ethics, derivative products, pension and retirement planning, personal finance, and behavioral finance.
Given this broad spectrum, students focusing on Asset Management qualify to work as experts in quantitative-oriented areas of the financial services industry, such as risk management, asset management or the development of financial products. They also qualify for finance or treasury positions in non-financial firms or in the consulting industry. The following list provides examples of courses particularly related to our topic.
List of courses
More detailed information on each module can be found by copying the 8-digit code into the search field of the University’s course catalogue.
|Private Banking: Theorie und Praxis der modernen Vermögensverwaltung||BOEC0067|
|Portfoliomanagement Theorie 1-2||MFOEC172
|Asset Allocation and Alternative Investments||MOEC0281|
|Capital Adequacy and Risk Measures||MFOEC163|
|Real Estate Finance||MOEC0309|
|Private Banking: Aktuelle Herausforderungen in der Vermögensverwaltung||MOEC0345|
|Advanced Portfolio Management Game||MOEC0293|
|Financial Risk Management||MFOEC121|
|Applied Topics in Finance||MOEC0296|
Faculty members involved
The following Faculty members research and/or teach in Asset Management.