Trust money management: the essence, the best options, the rating of companies
To entrust the management of your own money in our time has become possible not only for the rich, but also for anyone with any income level. This is an investment tool along with investments in gold, real estate, deposits, securities, with only one difference - professionals manage money for a commission. That is why it is in the interests of money managers to invest them successfully, earning a pleasant income for an investor.
What is trust management?
In the market of financial instruments, it is possible to invest your money by trust management of money, transferring your savings to a professional manager based on a legally executed document. You can transfer your money to a general fund - mutual investment funds (mutual funds), and individually with your investment strategy - this is an individual trust management.
In mutual funds, the money of many investors folds into one common “bag”, which is professionally managed by employees of an investment company. The amount of investment while the most realistic, even for ordinary investors, is possible - 10 thousand rubles and more. This is the most profitable investment for owners of small amounts. Mutual funds provide for collective investment in various spheres of life: the purchase of real estate, support for start-ups, investment in securities.
PAMM accounts also provide an opportunity, together with other investors, to transfer money into trust management by investing money in the stock and currency markets.
Individual trust management is schematically similar to investing money in mutual funds with the only huge difference that individual bag management is carried out according to a strategy agreed in advance with the investor, which involves investing significant amounts (from 1 million rubles) for sometimes obtaining maximum profit in risky transactions.
What can be trusted in individual management
According to the official definition in the Civil Code (Chapter 53), trust management is the transfer of an asset to another person’s management.
In developed countries, trust management is an integral part of the modern line of financial instruments. This is an opportunity to free oneself from independent money management, which presupposes the presence of professional knowledge in the relevant investment field - simply entrust this laborious work to professionals specializing in it.
Usually trust specialized companies in the management of funds, as well as other assets - movable and immovable property. All moments of trust and management are legally registered in the contract. The asset management company will conduct transactions on its own behalf, but in the interests of the client, receiving for it the agreed remuneration as a percentage of the value of assets under management, or a percentage of the earned super-profits.
The trust management service covers a wide range of objects: office buildings, storage and production facilities, housing, shopping areas, securities, copyrights, enterprises and property complexes.
Essence of trust management
Trust money management is a solid and reliable tool not only for preserving, but also for growing assets. Such a financial service is carried out, as a rule, on an individual basis, when the personal requirements of customers, that is, their investment goals, are taken into account.
According to the trust management agreement, the investment company represented by financial managers undertakes to work in the stock market solely in the interests of the investor-client, observing the conditions and restrictions stipulated in the agreement for trust management of money when concluding a transaction. Investment decisions are made by employees of the management company. The investor himself can monitor the results of work, but cannot interfere in the process - these are the conditions for the transfer of their assets to a professional financial manager.
Fiduciary money management services are provided by investment companies licensed by the Federal Service for Financial Markets (FFMS) for this type of activity. The FFMS strictly controls such companies, demanding that the rules of conducting transactions in the stock market with funds entrusted to management be followed.
Compliance with the procedures established by law forces companies to enter into transactions for the minimum amount of one million rubles.
The profitability of trust management depends on two significant factors:
- Investment conditions specified in the investment declaration.
- Mastery of investment managers.
The service of trust management of money in banks and investment companies suggests three basic strategies with common names corresponding to the essence of the strategy - this is a conservative strategy, moderate, aggressive and mixed. The proposed strategies differ in the level of risk and return.
The appendix to the contract for the trust management of money is called the investment declaration, in which the rules between the investor and the company offering intermediary services for the trust management of the investor’s assets are agreed in writing. Namely, the declaration specifies the types of assets for investment, their percentage parts in the investment portfolio and everything else about the investment strategies being undertaken.
A conservative strategy usually involves only the preservation of capital, that is, the yield will not be higher than the rate of inflation.
More aggressive strategies usually give better results, but a loss is also possible if the circumstances in the market are unfavorable.
A detailed investment declaration enables the investor to more accurately predict the results of managing his assets.
Commission investment company
The management company provides a commission for the work of managing the assets of investors. Commissions consist of two parts - interest separately for management and separately for the result, that is, profit. Management remuneration is taken away by the managers regardless of the results obtained - usually 1-2% of the investor’s assets per year. The management company receives a bonus for the result, super-profit only if the agreed work results are achieved, and this is calculated as a certain percentage of the profit received for the year.
The agreed remuneration for the result motivates the manager to efficientlybut at the same time it leads to a conflict of interests between the investor and the company due to the absence of guarantees from the management company to receive some profitability. Managers are not responsible for possible losses of the investor, but receive a share of the profits under the best of circumstances. It is precisely because of the different interests of the company and the client that the managers, without fear of losing the money of others, will always strive to use the most aggressive strategy. In the event of a successful outcome of the transaction, both parties will earn a good profit, and if the managers lose out, only the investor will be at a loss.
Even if the managers are ready to subscribe under the guarantees of the return of the investor’s money, in the event of economic disasters in the country, the investment company will not be able to compensate the losses to customers due to lack of capital.
Therefore, in order for an investor not to get unexpected unpleasant results, he must take an active part in the preparation of an investment declaration - for this he must have a general idea of the properties of financial instruments in which he intends to invest his money.Also, the investor must control the process of work, receiving reports from the management company on a monthly basis.
Trust money management: rating
The rating of management companies of investment companies is compiled by the volume of funds in the management of the company for the trust management service. Ratings are compiled by the National Rating Agency. The results are posted on the agency's website (ra-national.ru), and access to information is given free of charge. One of the leading leading positions in this rating is occupied by three banks - Sberbank, VTB and Alfa Bank.
Service of Sberbank
Trust management, which is, in fact, a financial VIP service, has become a popular destination in the Russian financial market. This service offers many large banks and investment companies.
Sberbank has been managing trust in money since 1996. Managing managers of the bank have tremendous experience in managing investment portfolios and have repeatedly been recognized as the best in Russia.
- The services of the remote control of this oldest and most experienced bank can be used only by Sberbank First customers, whose accounts should be allocated an amount exceeding 15 million rubles.
- Sberbank's fiduciary money management strategies include foreign exchange earnings, placement on international markets, long-term capital gains from investing in shares of successful companies, as well as shares of fast-growing companies and highly profitable asset management for risky qualified investors.
- The minimum amount of investment is from 3 million rubles.
Trust management of money in "VTB"
Trust management is provided by a large bank, VTB 24, which is part of the VTB group, which is the largest participant in the Russian investment market. A distinctive feature of the management in the "VTB 24" are the conditions of the commission, which are paid by the manager only if the investor receives income.
- The term of investment is recommended not less than 1 year.
- With trust management, VTB 24 uses 3 basic investment strategies: conservative - placing investments in bonds, highly profitable - placing in stocks, and balanced - mixed investments.
- The minimum amount to invest is from 1 million rubles.
Alfa Bank: remote control service
Trust management of money "Alfa-Bank" provides for a minimum period of 1 year, but bank professionals recommend placing funds for 2-3 years.
- Placing funds in Eurobonds, shares of foreign issuers, government bonds and securities, bank deposits, stock market derivatives and mixed investments.
- Types of strategies are a wide range of investment - conservative, moderate, aggressive and structural, individual - according to an individual plan with the investor.
- The minimum amount of placement on the remote control - from 10 000 dollars.
How to choose a company for trust management
Choosing a bank or management company to manage cash is not difficult if you follow the recommendations below.
- Analytics company. When investing in money, any investment company or bank makes transactions based on market analysis, predicting asset purchase / sale transactions. On the website of the company must be present analytical and news blocks. Analytics is not cheap, and a small company without experience is not able to afford expensive market analysis.
- Level of reliabilityThere are ratings of companies for trust management of money; reviews of investment companies are published by rating agencies on their Internet resources. The most reliable of them occupy the top lines. This is the National Rating Agency, the National Association of Stock Market Participants (NAUFOR). In the ratings you need to pay attention to the number of customers and the amount of assets to be managed.
- Positive reviews. You must be interested in the opinions of customers of the selected company. Feedback from satisfied and dissatisfied customers will help to draw conclusions about the proposed cooperation.
- Investment strategies. The more investment strategies a company offers, the more experience. Companies with two or one strategies should not be considered as potential partners for investment.
- Personal manager. With trust management, the company must provide a personal manager service, with which all issues are coordinated and resolved in the course of cooperation.
- The right to intervene in the process. It is important to agree in advance with the management company whether the investor will be able to limit its actions.For example, initially set the percentage of assets in a portfolio to protect themselves from inappropriate actions of managers.
- Reports. It is important to find out whether the chosen investment company charges for reporting. In a reliable company, a report is provided at any time upon request of a client free of charge.