Why choose long/short funds?

If you’re planning on investing big but are worried about the volatility of the market, then investing in a new kind of fund is the best idea. This kind of fund is slowly gaining popularity because it maximises the market upside while limiting the downside risk. Such funds are called long/short funds.

In a long short fund, the fund manager may hold funds that are undervalued currently but believes will rise in price in the long run while simultaneously shorting over stocks that are overvalued so as to mitigate losses. These funds offer investors and people new to the market various opportunities to take advantage of the long/short strategy. And just like other mutual funds, these funds also offer daily pricing and the ability to liquidate the investment at any given time.

Advantages and Disadvantages of such funds

Advantage – The main advantage is that you get a diverse portfolio. Your potential investment sphere is enlarged because you look at both long and short funds for the maximum performance. Secondly, if done correctly, there is the potential for excess returns. These returns are gained from both rising and falling prices.

Disadvantages – These funds are considered riskier and should thereby be exercised with caution. If your profile is low risk, you should stay away from such funds. Moreover, because of the higher associated trading costs, these funds have a higher fee compared to traditional mutual funds.

That being said, long/short funds are an excellent addition to your investment portfolio. Even the top asset management companies in india would probably urge you to partake in one provided you fit their risk profile. However, remember that fund performances vary and even the top fund managers may make a wrong choice. In the end, it all boils down to one thing. What’s your goal and how soon do you want to achieve it? Because high risk can also lead to high rewards. Talk to your advisor and make an informed decision.

The need of wealth management

The management of wealth or wealth management as it is commonly known is a mixture of investments, savings, expenses, taxes etc into one integrate plan to achieve goals through proper management of one’s wealth. It is a process that constitutes the use of financial planning, investment portfolio and other services.

So why is such management important? Simply because once you have enough wealth, it is just a matter of time it is squandered if a provision is not made for it to grow. With proper management, you can double your wealth and reap the benefits and retire with a lot of wealth. Proper management of wealth is also beneficial during turbulent times when you might need a huge lumpsum of cash for emergency purposes.

The whole discipline of managing wealth includes the protection as well as preserving your accumulated wealth. It all begins with finding your true value. If all the hard earned money is squandered in expenses, then your wealth is low indeed. To grow your wealth, you’ll have to take decisions that cuts down on those expenses, reduce your liabilities so as to ensure you have enough money to invest while still living a well-settled life. And for that to happen, you’ll need a balanced portfolio of investments through both long term and short term. Most of these decisions can be taken by any individual with a little knowledge about finance and accounting. However most people prefer going to asset management companies in india or experts to handle their wealth. Ideally you should be distributing your wealth in such a way that it lasts your lifetime and can be passed to your kids. Investing in stocks, mutual funds and other savings and investment methods can be done to achieve those goals. This management of wealth is therefore very very important for every individual.

Invest responsibly with ESG

If you’ve been following up on the financial world lately, you might have heard about a new type of mutual fund making waves lately. And by lately, we mean it has been gaining traction around the world in the last couple of years.

Although it is too early to comment on their results but they have been performing well in the last few years compared to the standard. These funds are called esg funds. ESG investing is basically sustainable investing, taken into account from companies based on environmental, social and governance parameters. These funds mainly focus on the non-financial aspect of the company and invest in stocks of only those companies who follow the ethical route, haven’t harmed the environment, strictly follow Corporate Social Responsibility and have good relationships with stakeholders.

These funds, therefore are limited but slowly getting noticed. Companies that produce tobacco, alcohol etc are automatically ruled out from these funds for obvious reasons. The good thing is that esg funds in india are gaining popularity and many companies have started new funds under esg or have renamed some of their existing funds and shifted their policies accordingly.

The good thing about these funds is that you as an investor know where your money is getting invested at. And for a clear conscience, such funds are the best to invest in. However, before you venture into the relatively new but ethical kind of stocks, it is better to get a little expert opinion. Follow the market for a while, read more about such stocks and funds or better yet, consult your fund manager. They’re better suited and more knowledgeable in these situations. Even experts agree that not enough data is available on individual fund performance as it is mostly a new product. So, a little research is needed before diving into the world of ESG investments.

Why should you hire asset management companies in India?

 If you do not have the aim to secure and invest your money in a responsible manner, then even the top asset management companies in India or rest of the world cannot provide a good solution for you. To have a flouring business you cannot totally rely on the liquid savings that are desperate to come out of your bank account. So, you will have to very cautiously invest your money in meaningful investment products which will give you some good benefits in the future. Here, what we are indicating towards is mindful investment in assets. As asset is any prices possession which can be redeemed or something you can fall back on if at all a business goes down. As you must have seen with many businesses in the COVD-19 situation, you might have notices that a lot of them had to take a massive hit in terms of sales and their earnings.

This is a situation when the investments that you made would have kept you afloat in such strenuous situations. Those businessmen that were far sighted about any such business calamity arising, had already planned their assets and investments in a structured manner. There are different kinds of funds that one invests in, such as mutual funds, ESG funds, long-only funds and so on. It is a company’s moral duty and obligation to help their clients remain afloat in such tiring times.

It is very crucial and important to choose your asset management company very wisely. Usually, the bigger asset management companies in India or anywhere in the world do not need any kind of background checking to be done. However, if the asset management company is relatively new, a few years old, then maybe you should look at their previous work, the previous clients and only then think of hiring them as your asset management company.

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.