What are hedge funds and how are they different from investment banks?

Time and again we have a heard about hedge funds when it came to investment. Let’s try and understand what hedge funds are and how it is different from an investment bank. Well first of all, the main difference lies in the focus or the main thing that they concentrate on. Hedge fund is an avenue of investment where the pools of investments from the investors is formed and invested in many financial products, by putting risk management techniques to good use. On the other hand, investment banking is a financial institution that provides advising services to different business in order to raise capital and provide credit solutions.

Hedge fund technically uses a lot of varied proprietary strategies and trades or also invests in compound products, which also include unlisted and unlisted derivatives. To put it in simple terms, it is basically a pool of money that takes both long and short positions, sells and buys equities, trade bonds, currencies etc. to generate products at reduced risks. It lives up to its name, by which we mean, the fund in concern tries to put or ‘hedge’ the risk against the volatility of the market by giving alternative investment approaches.

Hedge funds are not available to just anyone. They are made for people who are high net worth individuals and institutional investors too, because it contains high risk. It is, in fact, considered as an alternative investment.

The management style of Hedge funds is quite aggressive since it requires to offer more returns to investors. Also, hedge funds are more open ended, by which we mean that the investors get an advantage of withdrawing capital depending on the net value of the funds. Another important point to remember is that hedge funds are not bounded by any kind of limitations, though they were put under certain regulation frameworks in 2007 and 2008 economic crisis.

What is the importance of knowing the asset company you are hiring before-hand?

If you look at the top asset management companies in India, you will notice that most of them have a specific criterion of choosing the clients that they world with. To be able to hire a specific asset management company, you need to give them a good business or you need to be able to invest a huge amount of money in the assets that they suggest. Asset management companies deal with not just investing in different kinds of assets, but also in things that come after it. For example, asset management companies take care of whether or not the asset is performing well. If not, then they either advise their investor to withdraw their money or they do it on their own if they have the authority to do so. They also introduce different types of funds to their investors such as the long short funds in India. The job of choosing the right kind of fund totally depends upon the asset manager. The investor is not expected to have knowledge about the functioning of all the funds all the time. When you go to choose an asset management company in India or anywhere in the world, make sure you do a good enough back ground check on them to make sure that they are liable and trustworthy and that they deliver what they promise. This is huge amount of money that we are talking about and hence, there is no harm in finding our information about them on your own. It is also necessary to know if you are trusting the right people. If they have a website, check out the services that they provide. If not, you could find out more through grapevine. The top asset management companies in India do not really require a background check, but you can surely check their performance in the same.

The emerging concept of ESG funds in India

ESG funds in India is still a newer concept and slowly catching up with the investment banks, wealth management firms and the investors as well. But what exactly are ESG funds? ESG funds are those funds that let the investors judge the corporations or business that they may want to invest in on the basis of the performance of the corporations and also on how they deal with environmental, social and governance issues or how they address them. ESG funds India, although a newer concept is slowly making its way into the world of finance. ESG funds are especially important for bigger corporations that have a big employee size and a chain of clients. Also, when you explore deeper, you will see what the significance of each of these factors of governance, social and environmental ones is. In the environmental perspective, the investors like to see what the firm does to contribute to the conservation and the sustenance of the environment. For example, if the business deals with a lot of chemicals, then it is ascertained what the company does to dispose of the chemical waste. Or how much they contribute to the goodness of the environment, or whether or not what they do directly affect the eco-system directly or not. The social factors look into the checking the relation that the business has with the suppliers, traders and most importantly, how happy their employees are with the company they are working for. And lastly, the governance factor, the potential investors would like to know if the company follows reliable and transparent accounting practices and methods and also whether or not the shareholders are given a chance and a say in voting on important issues. Here, they also see how they deal with major conflict of interests withing the firm and their business.

The importance of investment banking companies in India

Investment banking is a concept that is not very new to the Indian subcontinent. Investment banking is in fact one of the fastest growing industries in the market. But what do these investment banking companies in India and across the world actually do that makes them so important? Let’s find out today. The investment banking firms in India are majorly located in the tier 1 cities of the country such as Mumbai, Delhi, Bangalore, and Hyderabad which are the major ones. The major ones are however located at the financial capital of India and that is, Mumbai. The investment banks that these cities boast about are actually a link between the investors, and big size enterprises. One of the key roles that go without any doubt is that these investment banking companies in India and around the world advice big enterprises and government corporations on how to meet their financial needs and goals in the stipulated time. They also advise and guide them towards procuring enough funds from the companies. Let’s face it, for any organization it is a little tedious task to raise capital and funds. This is when the investment banks come into the picture. A good investment bank actually helps an organisation or a business sell the shares of the company. How do they do that? They determine the better price for the shares using sophisticated financial models. The major things and major points that are looked at is the potential of earning by the share, the strength of the management team. Investment banks also play a major role in advising people in mergers and acquisitions as well, by giving them a clear picture of whether or not the said organization or business is worth investing or not. They carefully scrutinize the offer before letting their client invest in it.

The real challenge of hiring asset management companies in India

Some of the top asset management companies in India, right now, will bank on the fact that post COVID-19 has left the world of finance and economy in shambles in most of the countries. With the number of people that have lost jobs, it has become increasingly difficult to revive the world of asset management the way it had earlier. Asset management is one of the main aspects of any business. not just for business, asset management is very important when it comes to individual finance as well. Assets are commodities that only add to the value of your wealth and appreciate as the time goes by. These are commodities that make your wealth base and capital stronger and also make you capable of taking decisions regarding expansion. There are different kinds of funds that your fund manager may advice you to invest into. Such as, mutual funds, long short fund, the ESG funds and so on. It is important to note that once you get on the journey to increase and expand your business, you are going to have to dive into it with a lot of research. It is not always important or extremely necessary to hire the top asset management companies in India, but be sure of the firm that you hire since you will be handing them your money. Also, you will also be giving your financial details and background to the asset manager who gets assigned to you. Therefore, it is extremely important that you be careful and do a little background check of the investment or asset management company that you want to hire. For this, you can visit the website, or check out their performance for the previous clients as well. This way, you will be able to decipher whether to hire them or not.