I’ve been asked what the difference is between a mutual fund and a unit trust. And also, what the difference is between a money manager and an asset manager.

The answer is: geography.

Mutual funds and money managers can be found on Wall Street. Unit trusts and asset managers can be found in Cape Town (where most of South Africa’s asset management houses have elected to base themselves).

That is: they are basically the same thing. As I understand it, the terminology is just legal jargon, where “unit trusts” and “mutual funds”, etc, are legally-defined terms in the legislation that regulates them.

I’ve written about unit trusts here, here, here and here.

For mutual funds, here is a Monday morning infographic:

Similarities aside, I think that “money manager” is a terrible term, and leads to all kinds of bad assumptions.

Like this Quora question:

And if you’re interested, I did post an answer:

The point is: money and assets are two financial-economic concepts that should not get conflated.

Money managers manage wealth and/or investments. Those can sometimes take the form of cash (or “money”). But for the most part, they do not.

To illustrate, I asked Google how much money there is in the world. It answered:

So let’s take the high-end estimate of $25 trillion. In the world.

But “money managers” invest in stocks and bonds (and other types of asset).

So the next question is – what is the market capitalisation of all the world’s stock markets? Helpfully, Bank of America Merrill Lynch recently released a map of the world by market capitalisation. Here it is:

In total, that’s around $39 trillion worth of equities.

Then bonds. Well let’s start with national debt (owed to governments, so government bonds). There is a website called www.nationaldebtclock.org, which will helpfully calculate the amount of global debt for you as you watch. Since I started writing this paragraph, the world has apparently accrued $9.156 million in interest charges. That was up to $9.982 million by the time I reached the end of the sentence. It’s all very alarmist – but as you may know, I’m not that alarmed.

Here is global government debt:

So about $61 trillion in government debt.

But there is more than just government debt – there are corporate bonds and corporate commercial paper and utility bonds and utility commercial paper and asset-backed-securities and a whole host of fixed-income assets to take into account.

According to the Independent this morning, as of mid-2014, total global debt was sitting at around $200 trillion.

So let’s just take that as a basic benchmark:

$200 trillion debt + $39 trillion equities IS MUCH BIGGER THAN $25 trillion cash

And that’s not including real estate, commodities, private equity, or derivatives.

Of course, there is some feedback in this – and plenty of double-counting. But the double-counting takes place on both sides.

My main point is: “money” is dangerous stuff. Sometimes, we call wealth “money”, and sometimes, we call cash “money”.

But those are two very different things. And if you get too caught up in keeping all your wealth as cash in a mattress, then that’s empirically a sure-fire way to lose it.

PS: that debt clock? Now up to around $63 million. #stillnotalarmed

Rolling Alpha posts opinions on finance, economics, and the corporate life in general. Follow me on Twitter @RollingAlpha, and on Facebook at www.facebook.com/rollingalpha.