Basic Structure of Investment Management

This chapter discusses how an investment firm might be organized and the key responsibilities of the investment manager. There are two main routes through which the funds would be allocated are collective investment scheme or a managed portfolio. Depending on which route is taken, the process for fulfilling the core duties would be different. In both cases, the funds would be allocated to a fund manager or managers whose responsibility would be to find the best investment and there would be others whose job is to track and monitor the funds. If funds are placed in a collective investment product, then the investment management house has already determined how the money would be invested and the stakeholder has only to decide whether this vehicle suits his purpose or not. There are various structures that can be used for these investment vehicles. Some of the most commonly used types of collective investment product such as open-ended investment company (OEIC), SICAV, mutual fund, and investment trust are discussed. If the firm is managing a portfolio on a customer's behalf, then it is important that the investment manager understands the objectives of the stakeholder before the portfolio is created. In some firms, the investment manager has to justify every single trade so that, if necessary, the firm could prove that the funds were being managed with optimum care.