Third party management is divided into two categories:

Collective management offers UCITS products (UCITS = Undertakings for Collective Investments in Transferable Securities), which can be either SICAVs (open-end mutual funds) or FCPs (investment funds), both of which operate in the same way but have a different legal form. Distributors sell shares of UCITS to their clients.

Discretionary management is an agreement between the asset management company and a client. A discretionary management agreement addresses a single client.

To meet their clients' expectations, asset management professionals have developed increasingly broad ranges of funds to match various levels of risks (and thus targeted returns) and investment horizons sought by clients. Thousands of funds exist, not just under traditional management, but also a growing number under new types of strategies offered by alternative management.

Traditional management covers four major categories of UCITS:

money market funds: used mainly by investors interested in investing cash over the short term;

fixed income funds: used for medium-to-long-term investment, with the majority of the funds invested in bonds. The fund's level of risk depends on the quality of the issuers of the bonds purchased by the fund;

equity funds: used for long-term investment, they can specialise in categories of companies such as large caps, small and/or mid caps, or in specific sectors (commodities, a given geographic area, etc.);

diversified funds: used for medium-to-long-term investment. The above-mentioned funds can also be combined.

Alternative management is a type of fund management that is decorrelated from the financial markets, the goal of which is to offer shareholders regular absolute performance in bear and bull markets alike. The funds are referred to as "alternative funds" or "hedge funds". There are many types of alternative management strategies, and to reach their objectives hedge funds may use a wide array of complex tools.

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Mini asset management glossary

Bond: a marketable security representing a debt held on an issuer for a medium-to-long-term period. A special type of bond known as a convertible bond allows the bondholder to become a shareholder in the issuing company in exchange for a rate of return below that of a conventional bond.

Equity: a negotiable security representing ownership of a fraction of the capital in a company with share capital.

Growth: a concept pertaining to companies with the potential for profit growth and which exercise their activity in sectors with high potential for development.

Value: a concept traditionally contrasted with that of "growth", which refers to companies with a low profit growth outlook, but also companies currently undergoing a turnaround or which might be takeover targets and which appear to be underpriced.

Derivative products: financial instruments based on marketable securities or market indices (securities, indices, interest rate options, etc.) used to: either reduce the impacts of a negative market trend, or enhance the impact of an investment by anticipating an expected fluctuation.

Structured products: a financial investment used to mix security with risk/reward. Structured products include a safe investment and a riskier investment designed to boost performance.

Benchmark index: an indicator against which the performance of a UCITS is evaluated over the recommended investment horizon. The index can be pure (money market index, bond index or equity index) or a combination of indices representing the trends in various markets and asset classes. The latter are referred to as composite indices, particularly in the context of diversified funds.

Tracker or ETF (Exchange Traded Funds): index funds listed on the stock exchange. These products offer the performance of an index or basket of equities by replicating their performance.