If you are an investor who has acquired or created a corporate investment fund, and it is time for you to choose an asset management company, here are some tips to help you choose AMC:
1) Pay attention to whether the company discloses information about its activities and the management that carries out these activities. Visit the pages on social networks and the AMC website. Most non-market AMCs do not have their own website, and post mandatory information on a separate page on the Internet.
2) Be sure to hold a personal meeting with AMC management to assess the adequacy and professionalism of professionals. Ask who will directly support the work of your fund, the experience of these people in the capital markets and directly in this asset management company, the availability of certificates and more. Better yet, describe the real case and ask a specialist to express an opinion and suggest options for implementing an investment project. Observe the behavior of a specialist. If he cannot provide a qualified answer at once and asks for time to study the question, such a specialist is unlikely to have much experience and in the future each of your questions will need time to study and analyze the information.
3) Visit the AMC office and find out how the company organizes document management. Companies with a nominal office usually offer to meet in the client’s office or in a restaurant.
4) Analyze the presence of offenses in such AMC at https://smida.gov.ua/db/offence, their number and frequency, because the presence of repeated offenses – is the basis for revocation of the license.
5) The number of funds in AMC management speaks not only about the experience, but also about the workload of specialists, so be sure to ask if asset management company is responsible for responding to your tasks and requests within a set period of time, such as hours. Be sure to record the order of cooperation in the contract so that there are no further misunderstandings.
6) Experience in AMC management of inspections by the regulator and other bodies. AMCs and CIFs are entities that are not bypassed by auditors, and are usually not only regulatory audits but also tax audits;
7) Not all AMCs provide advice, and usually this fact significantly affects the cost of the asset management service. But having saved on consultations, the client loses on much more, ordering consultations on separate questions from the law firms which have no practical experience of application of these or those norms of the legislation.
8) Reviews and recommendations of other investors who use or have used asset management company services. Despite the fact that 313 AMCs operate in the capital markets, the market is quite narrow, only 20% of these companies offer market services, the rest do not take third-party funds into management and serve only their own assets or the assets of their beneficiary.
9) The presence of own funds in the management of such AMC, or belonging of such AMC to a particular business group. You must understand that there is a risk of a conflict of interest, and therefore this issue should also be discussed and documented.
10) Gather information about the ultimate beneficiaries of the asset management company, analyze the presence of related businesses, and make sure there are no criminal cases.
Despite the fact that the procedure for replacing an asset management company is provided by current legislation, this process is not always easy. Therefore, asset management company should be chosen carefully from the very beginning in order to build long-term fruitful cooperation and be satisfied with the quality of service.