In order to grow their wealth, investors of all types can choose to look to the financial markets. However, building and managing an asset portfolio is not within everyone’s reach. The wide variety of financial instruments available makes this exercise difficult for individuals. The latter often have neither the knowledge nor the time necessary for the optimal management of a stock market portfolio. To meet their needs, they entrust their savings to professionals with the technical means and experience for this type of operation.
Companies are also looking for investments for part of their cash flow. Here again, the management of a portfolio of financial assets is most of the time delegated to specialized entities. The objective for these two categories of investors will be to find financial investments which combine three main criteria: liquidity, security and profitability.
The Different Forms of Asset Management for Third Parties
First, some investors choose to make their investment decisions directly by buying financial securities (whether stocks, bonds, etc.). This practice requires, as said previously, to have a wealth of knowledge in order not to be lost in the face of the multitude of accessible products and in the face of the risks presented by the financial markets.
Asset Management Is Now Dominated By The Use Of Specialists.
We can start by defining asset management on behalf of third parties. Management on behalf of third parties is defined by the delegation of the function of ‘investment and management of capital and savings by numerous diffuse agents, private or institutional, for the benefit of a specialized entity, the management company, in return for remuneration (management fees, subscription fees, etc. The Hamilton Chukyo Brokerage option is there for you.
The regulations relating to this practice are based on the Financial Instruments Markets Directive. These asset management services on behalf of third parties are henceforth only the responsibility of portfolio management companies, whose main activity is and which must be approved Financiers. At the end of these entities were entrepreneurial, owned by individuals, 21% owned by credit institutions, 7% owned by insurance companies and mutual.
Types of Asset Management
Their activity revolves around two main types of asset management on behalf of third parties: management under mandate and collective management.
Management under mandate allows a client to entrust the management of his financial assets to a portfolio management company. This type of management is only intended for investors with a capital greater than a given amount. A management mandate is established in order to define the client’s objectives (investment period, risk sensitivity, targeted performance, etc.).
Management is therefore completely in the hands of the manager who will often invest, it should be noted, part of the amount under management in collective management products. The latter will have to the client an obligation of means, not of result. This personalized management method is more expensive, it must therefore be addressed to people with substantial amounts to invest so that the higher costs are offset by an expectation of higher gain.
It can also be noted that some customers, due to their specific request and their significant contribution of funds, require the creation of individual dedicated funds.