Why one might need help for financial advisory services?

It is very important that you invest your money properly as a business owner and that too in a proper manner. You will gain enough amounts of profits that also so that you actually move in a much secure direction when it comes to finance. It is true, of course that it is not all correct to always be expect the business owner to have all the knowledge required to make these investments happen. Which is why, for bigger companies, there are investment banking companies that you can rely on to give you all the needed information on the same.

There are even other advisory services such as the wealth management firms, the asset management firms, that help a business and also the business owner in setting it up. The reason that it is important that you talk to some really good financial services agencies is so that you end up getting all the right kind of information regarding the same and when we talk about higher businesses, investment banking firms become the most important factor.

If yours is a business which is a bigger firm or if you are an HNI, then you need to make sure that you get in touch with an investment banking firm to help you grow the charts of success. It is also important that you hire the good ones, the ones that are on top so that you get a reliable and trustworthy consultation done. More than how much amount of investment is done, it is about the quality of investments that is done and which is so important and this is why hiring he right kind of financial advisory service is so necessary for you and your business.

The businesses managed to stay afloat in terms of crisis because of the investments that they had done and the benefits that they were getting out of it was helping.

Importance of asset and liability management companies

One of the primary goals of any business is to start the expansion of wealth and having wealth does not just mean just having the bank balance in terms of the money or the money that you earn in general. The wealth id usually defined by the amount of assets that you own, be it in any form that you might have them in, and this even includes your credibility. For any kind of business owner, it is important, in a way to have some basic knowledge and understanding of managing wealth and it surely is not all fair to expect a business to grow profits just like that at the start. It is a process and it takes time. This is when some of the best finance companies in India will come to the rescue and aid you in actually navigating through the journey of finance.

When you visit an asset and liability management company in India, you will be first asked a number of questions so that they will be able to study your current financial portfolio and the current liabilities that you posses and with that, only then will they be able to form a plan and a strategy that will be useful for their client in the long run and how you will end up gaining any profits.

When you visit an asset management company, you will first be asked a number of questions so that they will be able to study your current financial portfolio and current liabilities, assets and only when will they be able to tell you about how you can go about your investment journey, properly. The asset manager who is assigned to you understands what your future goals for your company are and what you aspire to see for your company in future. Accordingly, they chalk out a plan.

The importance of a financial advisory service

 As a business owner, it is very important that you invest the money that you gain as a profit from business in a wise manner and that too in a way that is secure and will get you benefits as well. Of course, it is not the case that business owners will always know about investments and how they should go about it, but it is always a good sense to take help from a financial advisory service such as a wealth management company to take care of the decisions that need to be taken in terms of the business. They also help you in understanding venture capital, mutual funds and other kinds of investments. The job of the financial advisory service is to direct their client, the company’s investments in the right direction.

These services could also recommend hedge funds, and other kinds of investments according to the suitability of your business. What happens usually is that the financial service company does an in-depth analysis of the company and chalks out the strategies that the business needs to take in order to reach their targeted goal. As we see today, they would around us has certainly taken a massive hit in terms of economy and finance and a lot of big businesses were even forced to shut as there was no big selling happening.

The businesses that actually managed to remain afloat are the businesses that had made certain smart investment decisions earlier and this helped in surviving something as big as the pandemic. Therefore, if you are a business owner, it is important that you do a good background check of the financial service and also go through the available portfolios of the clients that they worked with earlier. So, take an account of your needs and aspirations of your growth and hire a service accordingly.

Why do you need investment banking firms?

The concept of investment banking is not very new both in India and in the outside world as well. In fact, some of the investment banking firms in India are known to be one of the top most in the Asian region. What is it, however, that makes investment banking firms to be one of the most sort after kind of finance companies in India when it comes to investment and finance? Today, let’s dig a little deeper into the functioning of investment banking firms. In this country, these are mostly situated in the cosmopolitan region of Delhi, Kolkata, Mumbai and Bengaluru. These cities are most commercial and the investment banks hence have branches there.

Whether it be one of the wealth management companies in India or somewhere else where they are located, they usually are just intermediaries which helps clients to reach their financial goals which they had for themselves. One very important fact about investment banking firms in India or anywhere else in the world is that they deal with businesses and companies that are formative and large in size. Therefore, it is important that they get a clear understanding of the functioning of the business they are going to help, before they jump into it.

Investment banks are also known to serve as a guide in procuring funds for the company and when required by their clients. Once there is the investment banking company in the picture, it really becomes helpful for the business to get more comfortable in selling the shares of the company.

What kind of profits are actually coming in, how much is it, is one of the major benefits that are checked out by the finance companies in India and anywhere else too. Mergers and acquisitions is one of the other major service and role that the investment bank plays and they help the business see the worthiness of the investment.

How investment banking firms help in credit management

If you look at financial history, you will understand that financial history is quite an old concept that has been around. If by any chance, you happen to visit any of the investment banking firms in India, you will get to see how big a part of the industry the service actually is. But what does credit management mean? Credit management actually is a function and a process which brings together a lot of company’s activities and even aims at making sure that the customers even play their respective roles with the terms and conditions. Credit management is actually a way of getting the credit granted to the customers with respect to their invoices and also, in specific terms and conditions. To put it simple, it is a method of getting the credit granted and even making sure that the payment which needs to be collected whenever due.

If you happen to visit any reliable and good credit management company, you will see that the team is even responsible to minimalize the risk and with that also maximize the opportunities. When it comes with businesses, it is quite a common practice that has deals and trades which are done on credits. It is not attached to it just for the sake of convenience, but also because it is quite a widely accepted fact that when this facility of credit is offered it usually help in building good relationships and in the business, it help in developing new ones as well.

Hiring any of the investment banking firms in India is only for the high performing entrepreneurs and big companies as well. Therefore, if you are a business that is growing, then you need to hire one of the asset management firms that helps the business in attain their financial goals in the stipulated period of time.

The importance of wealth management company for a business

 As a business owner, it is very important that you invest your money in a proper manner. In a way that you will gain enough profits and also so that you move in a secure direction in terms of finance. Of course, it isn’t all correct to expect to expect you to have all the knowledge about the right way to invest and have every information about the same. It is important that you talk to esteemed financial services agencies so that you have all the right kind of information regarding it. When it comes to bigger and higher businesses, a proper wealth management company is important. This is so because the people you need to talk to must be trust worthy and also, reliable. At the same time, it is necessary that you guide the company in the right direction of investment.

If yours is a bigger firm or if you are an HNI, then you need to speak to one of the investment banking firms in India that can help you with it. It is important that you hire the top ones so that you get reliable and trustworthy advice. More than the quantity, the quality of the investment is important and that is exactly what a wealth management company helps you in doing. They help you strike a balance between the assets and the liability, so much so that the assets outnumber the liabilities and you have enough resources that you can rely on.

The businesses that manage to remain afloat in times of crisis are those businesses that have invested mindfully and have taken every necessary step regarding the same. Be careful about the wealth management company that you are choosing, so that you know your money and your finances are in good hands and that it is safe.

Importance of financial advisor firms for a business

It is important that you look into investing your money properly if you want your business to grow. This helps you channelize your profits properly and also with a good strategy. In case you feel that you cannot manage the investments on your own, this is what finance companies such as investment banking companies in India helps one do. They will ultimately help in figuring out how to manage your company’s finance and business and helps in reaching the target ultimately. When it comes to meaningful and mindful investments, the money you get will be ultimately higher.

When it comes to long-only funds, an asset management company or a wealth management firm helps in pooling of these investments. Investment in assets applies to both tangible and non-tangible items and assets. Tangible assets are those which you can see and touch and even take a count of. Intangible assets are mostly on paper. These are mutual funds, shares, stocks, etc., which cannot be physically measured but are of value. It is vital that you do a mindful investments in these things.

Hence, when it comes to choosing your investment company, you should do it wisely. When you visit a finance company, you might be asked a tons of questions before you go ahead. You can even check out their previous clientele so that you get a clearer idea about how they function as a financial advisory. To get a better picture about strategizing and how to go forward, these questions are important.

When it comes to bigger firms and bigger companies, investment banking has a big role to play. The amount of money that is needed to pour into investment banks is quite huge. It is a risky game when it comes to this since the markets are usually volatile and hence, the investment banker usually need to be on his or her toes about the current trends and situations.

Financial advisory services and their importance

It is very important for you, as a business owner, to invest your money in a wise manner and that too in a secure direction. Of course, it isn’t all that correct to expect that you will always know how one should go about it, but it is always a good sense to take help from financial advisory services so that you are given all the correct information. When it comes to bigger and higher end businesses, they go to hire top asset and wealth management firms in the country because they have earned their name through the years of experience and expertise and are hence reliable and even trustworthy. This at the same time guide the company in the correct direction of investment.

More than just investing in any place, it is also vital that you mindfully invest according to the financial advisory services that you have hired. They might recommend you hedge funds, mutual funds, etc., according to your portfolio. What usually happens is that the asset or wealth management company carefully studies the portfolio of the client and then takes an understanding of what goals the company, the business owner has and accordingly, makes a strategy for the business moving ahead. In the unprecedented times that we live in, it has become very difficult to predict the economy hence, it is advised that you have a strong back up of investments, so that when things do not work out, you have something to fall back on. For example, as we are seeing today, that the world around took a very massive hit in terms of finances and the economy. Many big businesses also were forced to shut since there was no sell.

Only those businesses could actually remain afloat which actually had some smart decisions and smart investments kept in place.

Finance companies in India and role of investment banking

 The idea of investment banking isn’t all that new inside the India or countries around. In fact, in the world finance too, investment banking is known to be one of the fastest growing industries. However, what is it that makes the investment banking firms one of the most sort after type in finance companies in India and throughout the world? Today, we will dig a little deeper into the functioning of investment banking companies in India and rest of the world. In India, these are mostly situated in the metropolitan cities. Those consist of Mumbai, Bengaluru, Delhi, Kolkata, and many others. As these cities are most commercial, the investment banks also have their branches here.

Whether it be asset and liability management companies in India or somewhere else that they are located, they are usually intermediaries who help their clients in reaching the financial goals that they had decided for themselves. One very important fact about investment banking firms is that they usually deal with bigger businesses and government companies and help them in understanding their financial goals and needs in the stipulated timeframe. They also guide towards procuring funds for the company as and when required. When there is an investment banking firm coming into the picture, it really helps the business or the organization more comfortable to sell the company shares. How is this usually carried out? Well, they determine what the exact better prices are for those shares and they use some good financial models as well.

How much the said share actually brings in profits, is one of the major points that are checked out by any of the finance companies in India or anywhere that they are. Investment banks play a big role in carrying out the mergers and acquisitions of the companies. They help a business get clearer picture about worthiness of certain investments.

How do you invest in Hedge Funds?

When we talk about hedge funds, we know that they will either maximize your returns exponentially while also leaving you exposed to risk, volatility and illiquidity. If you're new to this or have little to no experience, it is highly recommended that you employ financial advisory services to manage your funds.

 

A little less known fact about hedge funds is that they aren’t all necessarily registered with the Securities and Exchange Board of India (SEBI). They don’t have to disclose their NAVs at the end of the day either. This is the only investment form with an exception to these regulatory requirements. To start with, your minimum ticket value is 1 Crore INR.

 

Keep in mind that the fund manager that you employ would have complete discretion when it comes to the composition of your portfolio, deciding the investment strategy and the amount of leverage. Highly skilled financial advisory services that you seek to employ should be able to quickly adjust your portfolio based on rapidly changing market conditions.

 

Speaking of strategy, these are the most commonly used strategies to invest in hedge funds:

●        Event-driven:
In short, some corporate events lead to price movements in the market. These situations cause fund managers to take long and short positions in different types of securities. Merger arbitrage and distressed asset funds are two examples.

●        Long and Short Selling:
Short-selling refers to the selling of securities without buying them, but with the intention of buying them at a predetermined date at a predicted price in order to make gains.

●        Market-driven:
Those that provide such financial advisory services must stay on top of global market trends to exploit the situation and make swift decisions based on changes in currencies, interest rates, commodities and equities.

 

Understanding the nitty-gritty of hedge funds is important before you decide to invest in them. See if it aligns with your goals, and weigh out the entire complex structure before you proceed.

What is Asset Liability Management (ALM) and what are the risks it addresses?

 Asset and liability management also known as ALM banking or ALM finance by the financial companies in India, manages the size, quantities and totals of balance sheet items. But what are assets and liabilities?

Assets are the items or value that a company or an individual holds which can be liquidated at any point of time. Liabilities on the other hand are something you owe to either your creditors, vendors, suppliers or other stakeholders, and they decrease the value of your company.

Asset and liability management strategies are used by financial companies in India and over the world to solve three major risks – Credit risk, liquidity risk, interest rate risk.

Credit risk – These risks occur when we don’t get paid as much as we expected to. With loans contributing to be the largest source of credit risks for most banks and financial companies in India, cash management, FX, credit derivatives, unfunded loan commitments, letters of credit and lines of credit are some other contributors to disturbing the balance sheet of an institute. They use the ALM model to take a consistent approach to project the impact of credit risks on cashflow and capital under various circumstances to lower their exposure to this risk.

Liquidity risk – Liquidity is the ability of your assets and valuables to convert into cash easily.  For example: Keeping your house as a collateral for an overseas education loan. Asset and liability management helps banks and other institutions to identify, measure and monitor liquidity risks by taking into consideration the future projections and adverse scenarios to warrant themselves against this risk.

Interest rate risk – The most strongly associated risk with ALM is the risk that has resulted because of volatility in the interest rates. Financial institutions quantify their exposure to this risk by running measurement tools and techniques along and create their own ALM model, outsource it or use a hybrid approach to insure themselves against interest rate volatility.

An introduction to Long Only Absolute Return Funds and what they bring to the table

Financial institutions with their portfolios seeking diversification are opting long only funds over hedge funds in an actively managed alternative funds space to generate returns. Ever since the global market crisis, investment banking companies, financial institutions, banks and independent investors have been looking for ways to increase their profits by diversifying their investments and reducing their exposure to market risks. From traditional mutual funds to alternative investment funds, no stone has been left unturned in an effort to preserve capital and maintain positive returns. Long only funds are the newest entrants in the alternative funds ecosystem helping investors get a bang for their buck.

This fund takes only long positions on undervalued securities and reduces exposure to the risk of market drawdowns by holding basic asset class instruments. An alternative proven to deliver results, investment banking companies and other financial investors use this strategy to generate real returns despite the market condition.

Why focus on long only absolute return funds over traditional mutual funds?

Highly beneficial – Fund management companies are rewarded generously since long only funds take an incentive-based approach to charge management fees and performance fees, which are around 2% and 20% respectively. The fund’s ability to generate high profits ensures that managers get a rewarding experience.

More flexible – In contrast to the dull and rigid indexed assets, these funds provide more agility in terms of allocating assets, selecting securities, the level of exposure, and the use of leverage and allow investment opportunities in limitless amalgamations across the instruments from the basic asset class.

More consistent – They protect against the potential downside caused by depression in the markets by diversifying across a spectrum of securities and keeps generating consistent returns from the investments.

 

Investment banking companies, institutions and other investors have always been safeguarding their portfolios by constantly re-evaluating their strategies and long only funds with its diversified approach is the future of investments for anyone looking to generate consistent returns.

How is investment banking different from wealth management and what are some of the key differences?

The world of finance is ever-expanding. With it, the range of services organisations and individuals need have also become extremely specific. The core purpose of both investment banking firms in India and wealth management firms is to help their clients manage their assets and/or wealth. However, asset management is the only common ground between these two varied services. Let’s look deeper at each of them to understand what they offer.

Investment Banking:

Investment banking firms in India and over the world usually deal with corporates, governments and institutional investors. The range of services an investment banking firm provides are:

Advising about mergers & acquisitions – Huge corporations and institutions are usually on the lookout to acquire new businesses to increase their portfolio. Investment banks act as a negotiator between the two companies and helps their client acquire or sell a business and help with restructuring the newly acquired business.

Underwriting – When a corporate or an institution wants to raise money by selling bonds, issuing shares or raising an IPO, investment banking firms raise money on behalf of the organisation.

Researching investment opportunities – Investment banking firms in India study, analyse, report and recommend new investment opportunities for their clients and help them earn profits.

Trading – Investment banking firms in India usually have a sales and trading team which helps their client manage money with either equity or bond transactions or both.

Commercial & retail banking – Although not all investment banks have the license to offer banking services, those who have acquired a license can offer services such as deposit placement, accounts for savings, cheque, mortgage and loan services, etc.

 

Investment banking VS Wealth management

 In the financial sector the most successful and well known field is investment banking and wealth management.Though there are several junctions between them, they are completely different fields. Let’s see what makes investment banking and wealth management a separate line of work.

 

Main differences between Investment banking and Wealth management

Investment banking is where bankers provide services through their expertise to an entity/company rather than serving an individual. Whereas wealth managers provide their expertise to a person whose net worth is higher.

High-net-worth individuals who are clients of wealth management companies are usually business owners. They may wish to obtain advice on business restructuring or potential mergers and acquisitions from the investment banking field, and may wish to obtain investment banking products. IPO or bond issuance

 

Origin of Investment banking in India

Investment banking firms in India were first established in the 19th century. Back then, only non-indian banks were overpowered across the country. In the 1970s, India's state-owned banks entered the company and became the first financial institution in India to provide commercial banking services by establishing commercial banks and ICICI securities offices.

By the time of 1980, financial banking, commercial banking and investment banking firms in india had grown rapidly.

One of the top most investment banking firms india is Avendus Capital founded in the year 1999. It is an investment banking company that originated in India, specializing in providing various services in the fields of asset management, investment banking, wealth management, and private equity.

 

Wealth management and its role:

Wealth management only refers to all aspects of fund management. Wealth management companies make money by charging fees for the various services they provide. In the investment field, customers usually sell managed account services, that is, discretionary investment accounts where the company's investment professionals conduct transactions on behalf of the customer.

 

Conclusion:

Almost all of the larger banks have investment banking and wealth management (private banking) departments, and generally retail banks and asset management companies, to take advantage of cross-selling opportunities in their customer base.

 Large asset management companies and wealth management companies have the advantages of efficient execution and free / cheap market research. Investment banks benefit from direct contact with major clients. Retail clients start a small business, they get rich and they want a wealth manager, they want to open up the capital markets, they need an investment bank.

Diversification of investors to long-only funds

INVESTMENT BANKS

Investment banking is a type of financial institution or can be referred to as one of the branches of banking that provides with means for raising capital, mergers and acquisitions, services in the nature of advisory services to the governments, organisations and corporations. Investment banking companies operate as go-betweens for investors (those with money to invest) and corporations (those with money to invest) (who require capital to grow and run their businesses).

 

WORKING OF INVESTMENT BANKS

The difference between an investment bank and a bank's investment banking division (IBD) might be confusing at times. Underwriting, M&A, sales and trading, equities research, asset management, commercial banking, and retail banking are just a few of the services offered by full-service investment banks. Only underwriting and M&A consulting services are provided by a bank's investment banking section.

 

MOVEMENT OF INVESTORS

The global second quarter bear market rebound in major stock markets brought up memories of the tremendous returns of the 1990s, which were wiped out by the internet bust and recent US financial scandals.

As a result of these losses, institutional investors and certain investment banking sectors have shifted their portfolios away from traditional mutual funds, which aim to beat an index benchmark, and toward alternative investments, which promise capital preservation and positive returns regardless of market indices or market conditions. Long-only funds are one example.

 

LONG-ONLY FUNDS

This type of funds invests in long positions, seeks out cheap assets, and reduces volatility and downside risk by holding cash, fixed income, and other asset classes. Options, futures, and other derivatives may be used by this fund to decrease or "hedge" risk and gain exposure to underlying physical investments, but not for speculative purposes. Investment funds that aren't hedge funds can also provide exposure. Long-Only ARFs, in contrast to typical funds that seek relative returns, pursue strategies that they believe will produce in positive or "real" returns independent of any index benchmark under all market conditions.

 

Investing in hedge funds

 

UNDERSTANDING HEDGE FUNDS

Since the beginning of the twenty-first century, hedge funds have become increasingly popular in financial portfolios. Hedge funds are simply a fancy word for an investing partnership with more freedom to invest aggressively and in a broader range of financial goods than most mutual funds. It's the union of a professional fund manager (commonly referred to as the general partner) and investors (typically referred to as limited partners). They put their money into the fund as a group.

 

AIM

The market direction neutrality of most mutual funds is a recurring subject. Hedge fund management teams resemble traders more than traditional investors since they intend to profit whether the market rises or falls. Some mutual funds use these strategies more than others, and not all mutual funds actually hedge their positions.

 

BENEFITS OF HEDGE FUNDS

The goal of a hedge fund is to maximise investor profits while minimising risk. If this structure and objectives seem a lot like mutual fund objectives, that's because they are, but the parallels end there. Hedge funds are often thought to be more risky, aggressive, and exclusive than mutual funds. Limited partners fund the assets in a hedge fund, while the general partner administers the fund according to its strategy. Hedge funds get their moniker from the trading tactics that fund managers are allowed to utilise.

 

EXPERTISE IN FINANCIAL SERVICES

Our company's experts have a lot of experience in regulatory and financial advisory services. Our team of experts has in-depth understanding of domestic regulations as well as hands-on expertise with difficulties relevant to all of the fund sectors we work with. We've made agreements with top advisors who have already worked with regulators and can offer useful insight.

Our financial advisory services and advisors are focused on identifying opportunities and leveraging them to the customers' benefit through customised and innovative ways. The technique is based on complimentary elements such as industry/sector knowledge, multidimensional tools, and the ability to supply services both locally and worldwide.

Understanding the concept of asset/liability management

MEANING OF ASSET/LIABILITY MANAGEMENT

The concept of Asset/liability management means the use of assets and cash flows towards reduction of risks of a company or body corporate from losing money because of its inability to pay a liability within the stipulated period. Assets and liabilities that are well-managed can help one increase the rate and chance of profitability. This method is used to assess the risk associated with bank loan portfolios and pension plans. The economic worth of equity is also included.

 

CONCEPT OF ASSET/LIABILITY MANAGEMENT

Asset and liability management is a business strategy that helps firms deal with risks that arise from a mismatch between liabilities and assets. Changes in the economic landscape, such as changing interest rates or liquidity requirements, might cause these differences.

The main goal of a robust ALM framework is long-term stability and profitability. They achieve this by carefully controlling credit quality, liquidity requirements, and the availability of sufficient operational capital. Unlike the other available techniques of risk management, this concept is a collaborative approach that employs frameworks to examine and analyse the complete balance sheet of an organization. It aids in ensuring that assets are invested to their full potential and liabilities are regulated over time.

 

RISK MITIGATION EXAMPLE OF ALM

Despite the fact that ALM frameworks varies substantially amongst companies, they all involve the mitigation of a wide range of risks. Interest rate risk and liquidity risk are two of the most basic hazards addressed by ALM.

·         Interest Rate Risk - The dangers of changing interest rates and the impact of unstable interest rates on future cash flows.

Deposits and loans are two examples. Interest rates have an impact on both, therefore altering rates might result in asset and liability mismatches.

·         The ability of a financial organisation to liquidate assets is known as liquidity risk. Its financial situation will suffer if it is unable to do so.

·         Other Risks - ALM can also be used to manage currency risk and capital market risk.

 

Various sorts of enterprises, such as banks, financial institutions in India, non-bank finance companies in India, insurance companies, asset management companies, and even non-financial companies, employ Asset Liability Management to meet regulatory or prudential criteria and are benefitted by this approach.

Why invest in hedge funds?

Hedge funds are a type of mutual funds that are unregistered private instruments partnerships that trade in different types of instruments like securities, non-securities, derivatives, etc. Hedge funds are not subject to the same regulatory requirements that mutual funds need to fulfill. These investments are not regulated by the Securities and Exchange Board of India (SEBI). All other types of mutual funds are required to follow such regulations.

Hedge funds are pooled money from individual investors, high net worth individuals (HNIs), banks, corporations, etc. that are collectively invested in different securities in the national and international markets. There are different strategies using which these funds are invested, and each of these strategies differ. Hedge fund managers invest their client’s funds based on their specific requirements.

In event driven hedge funds, the investors take advantage of the price movements in the market, for example, when a corporation is involved in a merger or acquisition, etc. Another strategy is long/short selling in which the funds of the portfolio are equally distributed among long and short positions in the market. This way, the portfolio has a better risk-return policy, as the risk is mitigated in such a way that even when the market is not performing well, the portfolio performs well. 

There are different types of hedge mutual funds like domestic, off shore, and fund of funds. Domestic hedge funds are those investments that are made within the country and are subject to taxation by the Government of India. Offshore funds are invested in countries outside the home country, preferably to reap the benefits of low taxation in such countries. Fund of funds are an entirely different type of funds that are invested in other hedge funds, instead of the securities. Hedge funds carry high risk as it does not fall under the regulation of SEBI, but it also earns high returns as it is a pooled investment vehicle. This type of investment is a highly suitable credit solution for high-net-worth individuals (HNIs), banks, corporations, etc.

Create a balanced financial portfolio

Investors have only one goal in mind - add value to the money they are investing. In these unprecedented times, it is of utmost importance for all investors to invest wisely, and in such a way that they make most of the fluctuations in the market. This is where long-short funds come into the picture. This is a specific type of mutual fund portfolio in which some investments are held long and some investments are shorted. The objective of this type of investment is to add value to the client regardless of how the market is performing. The fund managers do this by investing on behalf of the client in long and short positions in the market. When the manager feels that a certain investment will do poorly, he/she shorts that fund by selling. In most cases, only stocks that are overvalued at the moment are shorted. Long short funds in India are relatively new, but have been found to add value to the investors.

 

This investment portfolio is also referred to as the 130/30 fund strategy. For instance, a fund manager invests 100% of the client’s initial capital in long positions in the market, then goes on to invest 30% by shorting the stocks/securities. To explain it further, the initial investment of 100% will remain in the market, while any profits earned by shorting the 30% stocks/securities will be reinvested again in the market. Through this strategy, the fund managers are in a position to create a portfolio worth 160% from the initial investment of 100%.

 

Long-short mutual funds add value to the customers by giving them the opportunity to invest in a diversified portfolio. The investment does not depend entirely on the market conditions as the diversified investment helps in creating a stabilized financial portfolio. Unlike other investment portfolios, investors have the opportunity to take advantage of both rising and falling markets in case of long-short funds. Proper advantage can be taken from the volatility in the market. There are multiple top asset management companies in India that are involved in long-short funds. One of the major advantages of this type of portfolio being that short selling is permitted in this case, while it is not for other types of mutual fund investments.

Sustainable investment is the way forward

The world is changing drastically, and along with it the need for us to be aware of sustainable practices in all aspects of our lives. In the long run, it is important for all companies and governments to be more mindful of different factors affecting the environment and should actively look at giving back to the society that nurtures them. The concept of ESG (Environment, Social, and Government) funds is a sustainable investing act that measures a company’s score on different aspects like environment-friendliness, labor laws, Corporate Social Responsibility (CSR) initiatives, human resource rights, etc. This is a means to create accountability for corporations to be responsible towards their environment and the people who work for them.

 

ESG investing is the need of the hour because it benefits both the company and the investors in the long run. Now more than ever, it is evident that companies that do not adopt sustainable practices and pollute the environment will not be able to sustain in the long run. ESG funds in India is a subtle push in the right direction, which will in turn be a win-win situation for all the parties involved. Many investors are also actively looking into investing in more such companies that are considerate towards the environment and willing to give back to the community. Data also shows that companies that rate high on the ESG score have a good debt-equity ratio.

 

Nowadays it is common for companies to have strong values that help them in building a socially and environmentally responsible business model. ESG funds India are causing a change in the marketplace, it is a good practice to show both companies and stakeholders that the future is not only about profitability. This initiative also helps to align their personal values and goals with their investment practices, they can invest only in those companies that have a high rating of ESG score. Many large investors are already adapting to such practices, and since it is within their capability to make a difference through their investment, corporations, and governments must also be ready to take responsibility and accountability.

Everything you need to know about Wealth Management

Wealth management is a branch of financial advisory service that involves consulting affluent clients on their financial needs, goals and investments. In simple terms, a wealth manager acts as an advisor to their client in matters of investments and managing their wealth. They offer tailor-made and personalised financial strategies to their clients based on their individual financial needs. Wealth management involves a broad spectrum of services like legal and estate planning, tax services, retirement planning and more. Affluent clients can seek advice from an individual expert or even hire a bigger wealth management firm based on their business needs. Hiring a wealth management firm will give the clients access to a bigger team of experts as opposed to only one individual. 

 

Wealth managers usually charge a fee based on the services they provide. This fee can differ across each service provider. For example, some wealth managers charge an hourly rate for their advisory services, some charge a flat rate etc. Most of these managers charge a certain percentage of assets they manage. You can generally see this fee in the range of 0.50% to 1%, but this varies across different accounts. While this percentage can seem like a very small number, affluent clients usually have a very big portfolio that ranges in millions of dollars. Since affluent clients have a high net worth, it’s important for them to be able to trust their advisors and consultants. It’s because they’re dealing with a lot of money. This is why the designation and background of their advisors is crucial. The top 3 financial certifications include Chartered Financial Analyst, Certified Financial Planner and Personal Financial Specialist. Before you hire a professional service or an individual to manage your wealth, it’s also important to vet their credentials and past work in the market. This is to avoid getting stuck with a service provider you can’t trust. Just like there are many investment banking firms in India, there also exist many wealth management firms that specialise in this particular division. 

Investment Banking vs Asset Management: What is the better career choice for you?

Finance is a world full of opportunities for budding entrepreneurs and individuals with a financial background. It offers lucrative career paths to finance students because the jobs are high paying, and the benefits are endless. But new students can often find it daunting to choose a particular role or path because once you start working towards a particular career, you have to stick with your choice. To make your choices easier, let’s take a look at the two most common areas in the world of finance - investment banking and asset management. 

 

Investment banking

 

Investment banking is the process of creating or raising capital for companies, banks, governments and other entities. Investment banking companies are involved in mergers and acquisitions, new securities underwriting, stock purchases and more. An investment banker’s job can further offer specializations in consulting, banking analysis, capital market analyses, research, trading and more. 

 

Asset Management

 

Assets are an important part of any business, company or organization. In simple terms, it is any resource that is owned by a company or an individual in addition to receivables from others. Asset management is crucial for businesses, especially big companies who often struggle to keep full track of their assets. This is where asset managers come in and help companies stay on the right track, mitigate risks and manage their assets better. They help their clients reach their investment goals through personalised strategies. They work with various clients like individuals, insurance companies, pension funds, governments etc. Their job role includes analysing financial statements, estate planning, advising on complicated buying and selling strategies like investing in long-only funds and more. 

 

The basic education requirement for investment bankers and asset managers is a bachelor’s degree. Moreover, an advanced degree from a prestigious or an Ivy League university is often preferred by the big, reputed companies. Aspirants should often be good at crunching numbers, have good analytical skills, excel in accounting and be knowledgeable in economics. 

 

No matter which career you choose, getting started with a good internship is often beneficial and can help you build a strong network in the finance industry. 

Understanding the basics of hedge funds

A hedge fund is an investment partnership that is offered to accredited investors and institutional investors. In this type of fund, a variety of investors come together to pool their funds and the fund manager invests this money using a variety of sophisticated and aggressive strategies. A hedge fund requires investors to keep their money in the fund for a minimum of one year and nothing less. Investors can withdraw their hedge funds investments by giving their fund manager a narrow period of intimation. As compared to normal funds, these hedge funds are more aggressively managed in order to generate higher returns. This involves using leverage, holding short/long positions in derivatives in domestic as well as international markets. 

 

Understanding accredited and institutional investors

Accredited investors are individuals or entities that are allowed to invest in securities that may or may not be registered with financial authorities. They are individuals who have a net worth of more than one million dollars and earn a set amount of money year on year. 

 

Institutional investors on the other hand are non-bank individuals or companies that trade in securities worth a significant amount. These include pension funds, mutual fund companies, commercial banks, insurance companies and more. They are some of the biggest players in the market because of their financial status. 

 

Hedge funds are less strictly regulated by the SEC or Securities and Exchange Commission. Big investors usually entrust big financial advisory services to manage their hedge fund investments. Due to the high investment values, these investors also expect a significant return on their investments. This is why the main purpose of a hedge fund is to maximize profits and returns. These hedge fund managers employ a number of complex strategies to generate high returns on investments. The most common strategies are classified into event-driven strategies, relative value strategies, macro strategies and equity hedge strategies.

Everything you need to know about asset and liability management

Financial terms like assets, liabilities, investments and more can be scary and confusing to understand. Manoeuvring the world of finance is scary mainly because each business decision can have a big monetary impact, whether for good or for bad. This is why it’s okay to take your time and learn the basics before jumping into the more complicated terms. Before understanding the concept of asset and liability management, let’s first understand what exactly asset and liability means.

 

In simple terms, an asset can be defined as anything which is of value that can be converted to cash. Assets can be tangible or even intangible. Furthermore, these assets can be divided into the categories of current and fixed assets. The correct value of a company’s asset is recorded in the balance sheet of the company. On the other hand, liability is something that a person or company owes to another entity. It is the financial obligation of a company over another. It is legally paid to the person in the future, either in the form of an asset or service.

 

Asset and liability management means managing the financial risks of a company that can arise due to a mismatch in the company’s assets and liabilities. It is a practice of maximizing profits and mitigating risks of liquidity and change in interest rates. While traditionally, finance companies in India only concerned themselves with liquidity and interest rate risks, the concept of asset and liability management has now broadened to include foreign exchange and capital market risks as well. ALM is adopted across various financial organizations including banks, insurance companies, asset managers and more. Adoption of ALM can help organizations prepare for future risks in a better way. This is because they’ll be in a better position to manage their liabilities strategically. More and more companies today have adopted ALM strategies with the help of financial firms and consultants.

Understanding hedge funds

Time and again, we have been hearing about different kinds of hedge funds whenever someone talk about investment. Let’s look into and try understanding what hedge funds actually and what they do. A hedge fund is nothing but an avenue of investment where pools of investments from different investors is formed and then invested in different financial products. This is done by putting the risk management techniques to good use. How is this different from investment banking? Well, investment banking is a financial institute that aims to provide advice on services to different kinds of businesses so as to raise capital and provide credit solutions as well.

Also, hedge funds are not available to just any body. It is mostly for people who are high-net worth individuals and also institutional investors as they do contain high risk. Hedge funds are actually considered as an alternative investment.

Since it required to offer more returns to the investors, the management style that is adopted for hedge funds is quite aggressive too. Plus, since hedge funds are more open ended, which means that investors get an advantage of withdrawing capital depending on the value of the funds. Also remember that the hedge funds are not restricted with any kinds of limitation, though they are put under certain regulatory framework since the 2008 economic crisis.

To help you with the hedge funds and to understand the functioning of asset management better, you need to hire an asset management company. Make sure that you choose them wisely and do a thorough research before you go ahead with them. This is a lot of money that we deal with and hence it is an absolute must that you are sure about the company that you are choosing to help you with this. Look for them online, read reviews and so on.

The importance of a good asset and wealth manager

In the time of crisis, you might have heard from some of the top asset management companies in India that many investors are panic selling as the markets are going down and also the investors are in a way losing their patience at this time of the crisis. There is also a school of investors who chose to not sell their shares as it also formed a major part of their assets and even reaped high benefits over a long period of time. However, it is important to note that the difference between these two types of investors is not just about the difference in the level of patience, but mostly also about the guidance that they might be receiving from their wealth or asset manager.

It has however, always been reiterated that when the markets are down, it is actually the best time to buy those shares because they are available are a lower or a cheaper rate and it will only see a growth in the future.

Unfortunately, however, not all wealth or asset managers are always capable of making their clients understand this concept. When this happens, then the investor ultimately looses out on the profits that they were going to gain had they got the proper guidance for the same. This then brings us to the main point of the blog, of having a good wealth manager. A wealth manager is not just someone who managers your account but also someone who plans out and strategizes the growth of your wealth for you. He or she needs to also make you aware of the different concepts such as ESG funds, long shorts funds in India, different kinds of mutual funds, and so on. They need to inform and educate you about what actually is best for your financial portfolio and even disadvantages of the rest.

How does an asset management company help the business?

If you want to see your business grow, then it is very important that you manage your investments and also the money, and the profit that you receive with a strategy, so that you get financial stability. If by any chance you feel that you cannot manage investment or do not have sufficient knowledge for managing the same, then you could take help from any of the asset management companies that can help your business reach the target goal in the end. Therefore, it is extremely important for a business to have certain meaningful investments, which means, that they investment money in a way that gets higher returns in the time to come.

For this, you can hire one of the asset management companies. Asset management companies are those that help you manage your assets, liabilities and also help you navigate through the journey. A mindful investment can really get your money to flourish in the long run and you can get a steady return on this investment. In order to be able to decode what kind of investment or what kind of business actually suits your business profile, asset management company helps you. They also help you understand that ESG funds in India or rest of the world.

What an asset management company does it that it invested the pooled investments from the clients and also puts the capital to work through different modes of investments. It applies to both tangible and non-tangible assets. Tangible asset means those assets that can be seen or touched and whose quality can be physically measured. The intangible assets are those assets that you cannot see, feel and touch and are mostly just on paper. This includes, gold, property, bonds, ESG funds India, shares etc.

However, make sure that you choose your asset management firm carefully. Do a little research at your end before you go ahead.

Workings of investment banks and the difference between investment banks and wealth management

INVESTMENT BANKS

A financial services firm that serves as an intermediary in broad and complex financial transactions is known as an investment bank. When a start-up company prepares for an initial public offering (IPO) or when a firm merge with a rival, an investment bank is normally involved. Big institutional clients, such as pension funds, use it as a broker or financial advisor.

 

WORKING OF INVESTMENT BANKING FIRMS

An investment bank's advisory division is compensated for its services. The trading division is compensated for its business success with commissions. Many have retail banking divisions that make money by lending money to customers and companies, as previously stated.

Financial advisors, brokers, and salespeople are among the jobs available at investment banks. A career in investment banking can be lucrative, but it also entails long hours and a lot of tension.

 

ROLE OF INVESTMENT BANKING FIRMS

Investment banks are best known for acting as go-betweens for businesses and the capital markets. That is, they assist companies through issuing stock in an initial public offering (IPO) or a secondary stock offering. They also help businesses obtain debt funding by locating large-scale buyers for corporate bonds.

 

TOP 5 INVESTMENT BANKING FIRMS IN INDIA

1.   AVENDUS CAPITAL 

2.   AXIS CAPITAL LIMITED

3.   EDELWEISS FINANCIAL SERVICES LIMITED

4.   JM FINANCIAL INSTITUTIONS SECURITIES

5.   ICICI SECURITIES LIMITED

 

INVESTMENT BANKING vs WEALTH MANAGEMENT

Within the financial sector, wealth management and investment banking are two of the most common career paths. Despite the fact that there is a lot of overlap and connection between these two sectors, the two positions are somewhat different.

·         Investment bankers are more likely to work longer hours and earn a higher salary.

·         Individuals are the primary clients of wealth management, while companies are the primary clients of investment banking.

·         There is a lot of overlap between investment bankers and wealth management firms' activities.

·         Clients of wealth management firms are often business owners who may need investment banking advice on business restructuring or potential M&As, as well as access to investment banking products such as initial public offerings (IPOs) or bond offerings.