Asset Management Explained: Beginner Guide with Ben Hayward (CEO of TwentyFour)

Ever wondered what asset management actually means?

In this clip, we sit down with Ben Hayward, CEO and founding partner of TwentyFour Asset Management, to unpack the industry in a way that’s clear, practical, and easy to follow. From how investment funds are built to what fund managers actually do all day, Ben explains the difference between active and passive investing, breaks down different asset types like bonds and stocks, and shares why he chose a career in fixed income.

Perfect for students and early-career professionals curious about finance, this explanation is your front-row seat to understanding how big money gets managed.

Listen to the full conversation for more incredible insights from Ben on the industry, roles and career advice.

Episode Transcript

(00:00):
I just wanted to get a sense of the landscape of asset
management. Could you describe that?
Is it by asset class, geography.Whatever the split as you as
someone in the industry would describe it to someone thinking
about it? Well, I, I think your asset
management in general, if I, if I go to a top down, you know,
the business is the industry is based around providing

(00:20):
investment services to a really wide range of clients that
anything from from retail through to, to sort of stock and
wealth funds and sort of governmental institutions
encompassing intermediary wealthin all of those institutional
pension funds, insurance companies along the way.
And those products are by and large and offered as pooled
funds where you have a holiday clients in, in a single entity.

(00:44):
But as I said before, we all, you know, you also will do sort
of derivatives of that where it's a single client in a, in a
managed account. So there were a couple of
different, there were, there were loads of different wrappers
that that that the assets sit within.
The way of breaking down the industry initially is probably
to look at passive versus active.

(01:04):
So a, an investment in a passivefund you're making versus an
underlying index. So you know, you might invest in
a fund for example, that is against the the FTSE 100 and it
is aiming to not do anything other than give you the same
return as the FTSE 100 and it will be focused on for example,
tracking error. So how close is it to to that

(01:24):
index? So that's a passive fund.
It's not trying to do anything clever other than deliver what
what it says it's going to deliver.
Whereas active management, the fund manager is actually looking
to create a strategy where they add value in some way.
Now that might be versus an index.
Corporate bond funds be measuredagainst the corporate bond fund

(01:46):
index, for example. And, and you know, the manager
earns more because they should be outperforming that index on a
on a regular basis. So they're active versus versus
passive and then underneath active.
Well, actually underneath both of those you have probably asset
classes are the easiest thing togo to next.
So equities, fixed income, commodities, you know,

(02:08):
derivative strategies, property,you know, other, other types of,
of assets. And they'll have sort of sub
asset classes. So fixed income, obviously
government bonds, investment grade, high yield, securitized
and so on. Some of those might be sectoral.
So you might have, for example, a emerging market corporate bond

(02:31):
fund. So that is sort of geographical
to a certain extent that EM is probably more of a sector really
than a geography. But it's sector because it's EM,
it's sector because it is corporate bonds.
Or you might have things that are thematic, so sustainable
type funds or you might have funds that are trying to be a

(02:53):
solution, trying to deliver an outcome.
And as I said before, one of ourour main investment grade fund
is trying to deliver a set return over cash, but for a a
volatility target. So you're trying to keep in that
case it's trying to keep volatility under 3%.
So that's an outcome that it's trying to deliver a solution

(03:14):
that that it's trying to to deliver.
So I think that kind of gives a bit of an overview of, you know,
how the the industry is, is kindof organized.
You've obviously got a lot of specialisms in there as well,
you know, hedge funds, private equity, private debt, all of all
of those sorts of things. There's a very wide range of
risk. Obviously you can go all the way
from money market funds, instantaccess, just trying to beat cash

(03:36):
by a little bit all the way through to locking your money up
for eight years and hoping you get a really attractive return
at the back end of it. So it's a very, very broad, our
space is, is only fixed income and really majoring in developed
markets. Fixed income appeals to me

(03:58):
because I'm quite a sort of caution Mystic, cautious,
pessimistic person. And what I'm what I'm sort of
joking about there is that if you're an equity fund manager,
you're looking for the upside, right?
You're buying an equity in a, ina firm, you're buying a share in
a firm in a business that is perpetual.
You have to see growth in the business for your investment to

(04:21):
grow and pay you increased dividends.
But really the, the upside is that the share price goes up
and, and your investments worth worth more.
So you've got to be positive, You've got to believe in, in
that growth. And, and you know, the, the very
simplified flip side of that is in fixed income, you don't get
that, that growth upside. The best outcome you can get as
a bond fund manager or bond investor is you get your your

(04:45):
coupons along the way so your interest payments, however so
frequently they may be, and thenat maturity of the bond, you get
your money back. The better, the better words
for, for what is with the kind of the key part of fixed income
is about analyzing and identifying the, the, the risks,
the, the, the cons and the pros in the, in the investments.

(05:09):
And so, you know, it isn't all about just trying to, to make
sure bad things don't happen. It's also about trying to
identify the positives of, of portfolios you can put together
that provide a really good outcomes for, for clients.
But it does come down to I'd sayto sort of key analytical skills
if you're if you're in APM role,if you're in a portfolio

(05:32):
management role and you know what those skills really look
like. If you're looking at high yield,
for example, you've got to understand how a relatively fast
growing corporate works. You know what their USPS are,
what their balance sheet looks like, what their access to
funding looks like and what their chances for upgrade look

(05:52):
like. And if that's part of their
business plan, that's growth. OK.
I'd say the analytical skills for an ABS transaction are
probably slightly different there.
It's more quantitative, more structural, more in that kind of
traditional analytical type rolethat that you know that those
skills will perhaps come to the fore a little, a little bit
more. But I would say that when, when

(06:17):
your listeners are thinking about jobs in in fund management
and in fixed income fund management, you know there there
is a very wide range of roles within these businesses.