When it comes to managing your investments, it`s essential to have a clear and concise investment management agreement in place. This legal document outlines the terms and conditions of the relationship between you, as the investor, and the investment manager who will be responsible for managing your portfolio.
An investment management agreement is a legally binding document that sets out the responsibilities of both parties, including the investment manager`s duties, compensation, and the investor`s rights and obligations. It also specifies the investment strategy and the investment objectives that the manager must follow when managing the portfolio.
The agreement outlines the investment manager`s responsibilities, which typically include:
1. Investment Management: The manager is responsible for investing the funds according to the investment objectives and strategy agreed upon by both parties.
2. Portfolio Monitoring: The manager regularly monitors the portfolio`s performance and makes adjustments as needed.
3. Reporting: The manager is required to provide regular reports to the investor, outlining the portfolio`s performance and any changes made.
4. Custody of Assets: The manager takes custody of the assets and manages them on behalf of the investor.
The agreement also sets out the compensation that the investment manager will receive for their services. Typically, this is a percentage of the assets under management, and the fee structure is outlined in the agreement.
The investor`s rights and obligations are also defined in the agreement. These may include the right to review the portfolio`s performance, the obligation to provide accurate and complete information to the investment manager, and the right to terminate the agreement.
It`s essential to ensure that the investment management agreement is comprehensive and covers all of the key components of the investment management relationship. This includes the investment strategy, fees, and any restrictions or limitations on the manager`s activities.
In conclusion, an investment management agreement is a critical component of any investment management relationship. It ensures that both parties are clear on their responsibilities and obligations, and it provides a framework for managing the portfolio effectively. If you`re considering hiring an investment manager, it`s crucial to have a solid investment management agreement in place to protect your interests and ensure that you`re getting the best possible service.