Asset Management

Asset management is the method that a company uses to track fixed assets like factory equipment, desks and chairs, computers, even buildings. Although the exact details of the task varies widely from company to company, asset management often includes tracking the physical location of assets, managing demand for scarce resources, and accounting tasks such as amortization.

The most common usage of the phrase asset management is in terms of the financial services industry. Here it is used to describe the management of assets invested on behalf of a range of sectors including: collective investment schemes, pension funds and so-called private banking or wealth management (typically for wealthy individuals).

To assist businesses and organizations in asset management, many asset management software have been developed and are now available in the market. In choosing the particular asset management software appropriate for your organization, quite a number of factors need to be considered.

It is also referred to as Investment management, or the professional management of various securities (shares, bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds).

The provision of ‘investment management services’ includes elements of financial analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments.

The most successful investment firms in the world have probably been those that have been separated physically and psychologically from banks and insurance companies. That is, the best performance and also the most dynamic business strategies (in this field) have generally come from independent investment management firms.

by: CARYL GRECIA.

source: http://www.bestmanagementarticles.com/

Corporate governance: responsible shareholding in asset management

Over the last ten years, fund industry associations developed codes of conduct covering areas such as the duties of fund managers, criteria for board members, provisions relating to conflicts of interest, distribution, investor communication, relationship with the custodian bank and delegation of tasks to third parties. While there is much in common between many of these codes, some national fund industry associations focus particular attention on specific aspects of the business. At the European level, the industry is expecting the publication of a set of corporate governance principles from FEFSI. One key area of reflection has been the role of fund managers in exercising the shareholder rights pertaining to their investments. There are two sides to this:

• how should the asset manager, as a shareholder, behave: corporate governance on exercising shareholders’ rights;
• how an asset manager evaluates investees’ corporate governance and interacts with it on this issue: corporate governance of investees.

Corporate governance on exercising shareholders’ rights. There is broad agreement that the fund management company should exercise the shareholder rights independently and exclusively in the interests of the unit holders.

The code from the French fund association insists on the manager being in a position to freely exercise the rights attached to the quality of shareholder including the right to attend general meetings, exercise voting rights, access information and criticise management decisions. The French code strongly advises the exercise of voting rights whereas the Italian code is neutral on the attendance of shareholders’ meetings.

Under the Swiss code, membership and creditors’ rights may be delegated to the custodian bank or a third party, whereas under the French code a proxy may be granted to an appointed representative, but not the custodian, depositary or promoter. Where the rights are delegated, the Austrian code requires explicit instructions as to how the voting right is to be exercised. There are specific provisions in the Austrian and Swiss codes for the exercise of voting rights vis-à-vis group and affiliated companies, such as the custodian bank.

The Italian code prohibits the staff managing portfolios being a director of a company whose shares are among the assets under management.

In Austria and Switzerland, the fund management company must be able to provide investors with information on the exercise of these rights, whereas in France the manager must be at all times able to account for the position taken on the subject and account for the use of voting rights in the fund annual report. In the Netherlands, the Dutch Corporate Governance Code contains specific provisions for institutional investors relating to the publication of the policy on voting rights, how they have implemented it and how they have voted.

Under the principles from the UK Institutional Shareholders’ Committee and the code of good practice Association of Unit Trusts and Investment Funds, institutional shareholders are to have a clear statement of their policy and how they will discharge their responsibilities covering topics such as: how investee companies will be monitored, policy for requiring compliance with the corporate governance code, dialogue with companies and policy for meeting board and senior management, and intervention strategy and voting policy and internal audit thereof.

Corporate governance of investees. Asset managers through ‘assets under voting’ can play a significant role as shareholders. They must carefully monitor corporate governance at investee companies.

Various surveys show that good corporate governance leads to better investment performance in the long term. Companies, which are well governed and operate in a responsible and sustainable way, generally have the culture, attitude and transparent mechanisms in place to support their long-term shareholder value. Corporate Governance should then be part of the asset managers’ investment process and integrated in stock selection approach.

Several asset managers have disclosed the basic principles of their voting policy, especially on topics such as provision of transparent and relevant information, equal treatment of shareholders, the remuneration of top management and the company’s role in society.

Isis Asset Management, Hermes Investment Management, Morley Fund Management and Robeco have laid down principles for corporate governance and voting policies. ISIS takes established codes of practice for corporate governance as a starting point and briefly lays out its voting policy. Hermes and Morley go further and detail expectations for example in terms of the board, share structure, remuneration, accountability and relations with shareholders as well as social, environmental and ethical issues. Hermes offers companies, in return, a model of self-governance with respect to investees in the code of conduct in support of companies.

The French asset management association has separate recommendations on corporate governance, covering annual general meeting, shareholder communication, voting, board independence, management responsibilities and remuneration.

Conclusion. The codes of conduct for asset managers complete the set of corporate governance rules for funds. They sometimes include guidelines on how the asset manager should act as a shareholder.

Corporate governance is also becoming an investment decision criterion for asset managers as they exercise their shareholder rights and assume their responsibilities.

It is in the interest of both business and the asset managers to have clear and sound corporate governance rules. Asset managers should use their vision to support companies in respect of good governance.

By Laurent Denayer & Yann Power, Ernst & Young Luxembourg

Funds Europe

October 2004

source: http://www.ey.com/GLOBAL/content.nsf/Luxembourg_E/media_press_articles

The Flip-Flop Asset Allocation Method

Do you put all of your money into some safe CD’s to earn interest, or buy a biotech index fund to grab the next big move in genomic cancer drugs; or something in between? The world of investment options and strategies grows every year, so I’ll provide a simple tactic to boost your returns over the course of your investing career.

The flip-flop method refers to taking the income from an income-producing investment and flipping that profit into a speculative investment. Then, take the profit from that speculative investment and flop the profit back into another income-producing investment. By doing this back and forth you are capturing both ends of the investment spectrum to increase your portfolio in a quicker and safer manner than either one individually.

Always start with a relatively safe income investment first. This way, if your first speculative investment is a 100% loss, you’ll still have the income from your income-producing investment to recover and try again. And, you’ll hopefully have the added education that you will have learned from the speculative loss. (Starting with a solid income-generating base can also give you the confidence to reach for a more speculative trade.) Once you are able to complete a speculative profit, put the money into a brand-new income-producing investment. This way, each speculative gain will diversify your portfolio into a wider range of income-producing investments.

Once that you have created a stable base of investment income, you should start ratcheting up the interest rate that you are willing to accept for new income investments. For example, you may have started out with a 3-year bank certificate of deposit but now you need to get a higher yield, perhaps by buying an income-generating mutual fund. There are funds of preferred stocks, loan portfolios, and exchange-traded real estate investment trusts. Moving even higher in yield may require some online searching to find people trying to sell their second mortgages, annuities, pension payments, etc. There are websites where people list financial assets like these for sale. If you aren’t comfortable with your level of expertise for buying mortgages yet, you can start with only $100 with loan-broker websites such as prosper.com.

So you’ve got some income flowing and are itching to find a speculative deal to step up your investing level. Let’s start as small as possible: How about buying things at garage sales and selling them for more money on ebay? I found an ad for several hundred dollars of new printer cartridges for sale in a local classified ad. They were worth much more by selling them on ebay, even after shipping costs. I recommend you focus on your greatest interest (music, motorcycles, watches, or whatever) and find a market where to buy at low prices. And then add some value (refinish, update, add a bonus), and find a market to sell to the most frenzied fans. Bigger chunks of money are made on more expensive items, but you carry more risk if you don’t keep up to date with the market. Such as cars, boats, planes, homes, jewelry – objects that have a consistent and measurable marketplace to buy and sell them. For speculation with financial instruments, you need to go to the futures market to get the largest moves, and the most leverage. To keep from losing your home at the first “Locked-Limit” move against your position, options must be a part of each of your trades: either buy options alone, hedge a futures contract with an option, or use an option spread. When you’ve accrued bigger dollars to play with, you can speculate with land, commercial buildings, and businesses.

In spite of the specific examples that I have provided, you need to find areas that interest you the most for investment vehicles for both income-producing investments and purely speculative deals. Remember to always start with an income-investment first, and then start flipping and flopping your profits between the income-investments and the speculative-investments. This type of asset allocation rebalancing will certainly add greater returns to your portfolio.

source: http://publisherscloninghouse.com/Article/The-Flip-Flop-Asset-Allocation-Metho

The Last Will and Testament - A Model NOT To Live By

The death of Anna Nicole Smith has at least one valuable outcome, even if it is simply serving as a model of what happens if you die intestate, i. e. without a last will and testament.

One immediate point to take here, by the way, is the youth and vitality of the deceased. Few people who knew her, or knew about her, would have believed on that February morning that later that day they would hear that she was dead.

Wasn’t there something about, “Ye know not the day nor the hour”?

I may have the quote wrong, but you get my drift. It’s best to be prepared at any age if you have real concerns about what is going to happen to your estate, your heirs, or even your remains.

Even if you have not been purposefully following the televised “audition” as some are calling it, it has been hard to escape being exposed to some of the regretful details.

* Multiple claimants for the remains of Anna Nicole Smith - including her mother and at least two boyfriends.

* Multiple claimants for the custody of the child of Anna Nicole Smith - including her mother and at least two boyfriends.

* Multiple claims as to where the remains of Anna Nicole Smith should be buried.

The list goes on, but perhaps worst of all, is the complete uncertainty about the fate of her newborn daughter.

There are lawsuits in progress that may result in large sums of money.

While having an up-to-date last will and testament would not necessarily have solved all of these problems, it could have given the court a clearcut knowledge of her desires and wishes, and that is the ultimate goal of these proceedings…to determine the “will” of the deceased.

Looking at the time, expense, and trouble that this is costing the potential and possible heirs, would-be custodians, and supposed rightful mourners is bad enough, but realizing how much of this cost is being borne by the taxpayers of the state of Florida is adding insult to injury.

Okay, you and I don’t have millions of dollars to allocate upon our deaths, and we are sure that our mother, father, spouse, significant other, ___________ (fill in the blank) knows exactly what are wishes are. Do we really? Is it just and fair to assume that these people know who gets the money in the bank, who gets the house, or where we are to be interred. Is it to be the funeral of a veteran, or the burial of a civilian. Do we want to rest in that lovely cemetery beneath the pines overlooking that beautiful lake in northern Arizona, or ashes sprinkled over the Gulf of Mexico?

Years ago, my father died without a will. He and my mother owned the house they had paid for together over the years where my sister and I were raised. They had a shared bank account and some Certificates of Deposit which contained all the money they had been able to save out of both their paychecks. My mother’s only income was to be her (reduced) portion of my father’s retirement. Under the laws of the state of Florida, my sister and I had equal claim to all of that with our mother.

Fortunately, she had raised us right, and we signed over our rights to the estate without any hesitation or discussion, but, within our own extended family, we have seen the fights that can break out when the “will” of the deceased is not known, and we have seen the divisions and animosity that can develop between previously loving siblings and other family members.

Most of such results can be averted by simply drawing up a last will and testament and clearly stating your desires and wishes. While the services of an attorney, or at least a paralegal, can be invaluable, there are will forms and do-it-yourself last will and testament forms and software available for those who feel that an attorney may be too costly.

Whatever the discomfort of confronting the fact of death or the monetary cost now, however, having a last will and testament will often save a lot more expense and pain in the future.

by: DONOVAN BALDWIN

source: http://www.bestmanagementarticles.com/