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When you choose to invest your hard-earned money, it makes sense to put your faith in those with more knowledge and experience than you. However, it can be hard work to find an asset manager that you can trust and can provide you with the best ROI.
The first thing to consider when choosing an asset management company is if it has all the necessary and relevant credentials. It is important to learn as much about it as possible before handing over your cash. Ensure it has the required licenses to practice as an asset manager in the UAE, and find out which organizations it is registered with and in which countries it is licensed to trade.
It would also be useful to know more about the company’s shareholders and directors. Are they and the firm in good standing with various authorities? Has the firm ever been under any regulatory or criminal investigation? Does it have adequate professional indemnity insurance?
Once the basics are covered, you can make a more informed decision by considering the four 4 P’s: people, philosophy, process and performance. Look at the people within the company and find out how they are incentivized. It will help determine if the company is looking out for your best interests or its own. Next, look at its investment philosophy. What does it look for in investments? Is it consistent throughout its portfolio and does its philosophy match with yours? What investment process is followed? Is it repeatable and does it lead to the effective implementation of investment decisions? Can the process be audited so that it can correct errors in the process? Then you can look at performance, but rather than gauging it as good or bad, consider if the company performed as planned. Did it stick to its philosophy and look after its clients’ interests?
A final testament is to look at how individuals within the company are investing themselves. If employees are investing their own capital in the portfolio, then they have real faith in what the company is doing and have as much to gain or lose as you do.
• Check if the asset management firm has necessary credentials
• Find out about its current standing with officials and authorities
• Consider the four P’s: people, philosophy, process, performance
Source: Nicholas Baker, Special to Properties
The writer is a freelancer