An investment company is an enterprise – a trader in securities, that conducts other activities, can raise funds for joint investment by issuing and placing securities (investment certificates including).
The investment company places the attracted funds in its own country and abroad by purchasing shares and bonds of enterprises. A distinction is made between closed-type corporations, that have a fixed capital structure, and open-type financial companies, that change the capital structure by periodically issuing shares.
An investment company is one of the types of financial intermediaries that guarantee the implementation of indirect investments by enterprises.
Closed-end companies issue shares at once in a certain quantity. The new buyer can only purchase them from the previous holders at the market price.
Open pit financial companies, called mutual funds, issue their shares gradually, in portions, mainly to new buyers.
These shares can be transferred or resold. A more convenient organizational form is open-ended companies. The constant emission allows them to constantly increase their money capital. Thus, constantly increase investment in corporate securities.
In general, the organizational form of investment companies of open and closed types is based on the joint-stock form.
Types of Investment Companies
In the US legislation, as in the most developed legislation on this topic, investment companies are divided into three categories:
- Face-amount Certificate Companies – companies that issue certificates of placement. They entitle the holder to either receive a fixed income within a specified time frame or demand the redemption of a certificate within a specified duration.
An investment company turns to depositors and asks to finance its activities on the stock market, for which it guarantees a fixed percentage (for example, 5-10% per year) by issuing debt obligations.
- Unit Investment Trusts – corporations that sell shares (units; shares) in relation to a permanent investment portfolio, consisting of bonds or stocks. Shares of trusts have a limited circulation period, upon the occurrence of which they are canceled or sold.
In this case, the incomes are distributed among the holders of the shares.
If the investment trust is formed of shares, then until the fund is liquidated, all shares in its portfolio are sold, and the incomes are distributed among the shareholders.
- Management Companies – issue securities (certificates, stocks, shares) that have a legal nature of stocks. They are most often shared in assets, which may vary depending on the results of the company’s depositing policy.
Principles and Functions of Financial Companies
In order for the investors of companies to receive stable earnings, their investments are combined and provided in various projects. Profit is generated not only due to the pooling of funds but also in connection with the competent actions of the financial manager. Actually, the activity of an investment corporation is the activity of a financial intermediary.
There is a possibility to distinguish the functions performed by investment companies or three ways of activities on which companies, like Highmark capital, earn:
- Operations for the purchase and sale of securities. In simple words, speculation in the securities market.
- Operations for the distribution of capital in different directions to reduce risks. In other words, investing in dynamic companies and startups.
- Issuance of their securities and “managed” trading on the stock market.
The services of financial companies are available to various depositors, both large and small. And the income that the depositor can get depends on the successful or unsuccessful investment of funds. Corporations themselves receive commissions on profits and the exact percentage for managing deposits.
Short Investment Company Advantages Review
- Capital Union Bank offers a modern and more efficient accumulation method to preserve and increase capital. Capital Union Bank offers trust management services for investment portfolios. Capital Union Bank mostly relies on the wishes of the clients and on its many years of expertise in the field of the capital and financial markets. Trust management of an financial portfolio is:
- Profitable – low commissions;
- Clearity – daily reporting on the value of the investment portfolio;
- Available – low starting threshold.
- HighMark Capital Management is a subsidiary of Union Bank. The business line of the company is investment consulting. HighMark Capital Management offers a wider portfolio of its services: an active investment management approach with risk management, interactive dialogue with clients and targeted investment.
- Highmark Funds is a company that sells mutual funds with assets under management of over $ 60 million. The company offers a wide range of mutual funds. Highmark Funds has clients all over the world. Serves both private persons and institutional depositors.
- Context Capital Management is an investment management company. The company manages equity and fixed income portfolios for high net worth individuals, corporations and combined investment companies. Context Capital Management serves US clients.
- Union Capital Corporation is a private equity firm. The organization provides a full range of investment management and financial planning services.
This company serves private investors, corporations, and institutions around the world.
Financial advisors are located in various states of the United States of America, as well as around the world. Union Capital Corporation offers a strategic, planning-based approach to capital management, as well as a tailored process to the needs of each client.
Also, the company is a licensed securities broker/dealer. It is also licensed as a registered investment advisory firm and insurance agency.
The Benefits of Investment Advisory Services
Professional investment advisors offer investors the opportunity to use their assets through investment products that match their own preferences in terms of risk and return.
- In order to get a good result, the consultant will help you choose the right strategy.
- Clients are regularly informed about the latest market conditions. An assessment is made to determine if the current investment strategy is appropriate for the economic and financial circumstances.
- Safety and responsibility. Lack of access to clients’ assets ensures investment security. 100% confidentiality.
How does the Investment Consulting Process Work?
The process consists of several main stages:
- selection of the services you need;
- conclusion of an investment consulting agreement;
- investment profiling and determination of the risk profile;
- formation of a portfolio in the form of an individual investment recommendation;
- assistance in opening the necessary accounts and selecting a broker (if there is none);
- assistance in the implementation of the investment recommendation (portfolio);
- periodic individual investment advice on the instruments in the portfolio and new instruments;
- periodic reporting on your investments;
- tax optimization and tax planning for your portfolio;
- payment for the services of an investment consultant.
Let’s summarize. Now you know what investment companies are and how they work. You now have more chances to properly manage your personal savings and not only save them from inflation, but also get additional income.
But remember that financial instruments are extremely diverse: your future directly depends on their correct choice.