Trust management

Asset trust management

Trust management is the transfer of assets to an investor or other trustee for more favorable disposition. The trustee receives remuneration for managing the assets, which may be in the form of a fixed sum of money or a percentage of the income received. In addition, the trustee is entitled to reimbursement of expenses incurred by the trustee in connection with transactions involving the assets.

In trust management, ownership remains with the owner of the assets and the intermediary (trustee) disposes of them for his/her benefit. At the same time, the trustee's powers to dispose of assets are not unlimited – the law (or an agreement) may provide for restrictions on certain actions. Example of trust management of real estate. The owner has an apartment in Moscow, but he lives abroad. He can conclude a trust management agreement with a real estate company so that it: rents out the apartment, monitors the safety of the apartment, solves all issues with the tenants, and transfers a monthly fee to the owner. The specific obligations of the parties are specified in the contract. Real estate management will need to be registered with Rosreestr as a restriction of rights (encumbrance of property).

The most common type of trust management is the disposal of a client's money and securities for stock market operations. These assets can only be managed by institutions licensed by the Central Bank to work with private investors; they are called management companies.

Details

Trust management of financial assets has a number of pros and cons.

Pros include:

the investor does not need to understand stock market instruments;
the management company may purchase for an unqualified investor the securities that the investor himself cannot buy;
low entry threshold – for example, in unit investment funds (UIFs);
investments made by the management company may yield a higher return than deposits.

Cons include:

you have to pay a service fee even if there is no profit. On average, 1–2% of the amount invested is charged once a quarter. In addition, there may be commissions for entering an investment strategy, for its success and for early program exit. Success fees can range from 5 to 20% of the income amount;
no guarantees of profit or even safety of money, unlike a deposit;
in some companies it is impossible to withdraw funds at the first request of the client, it may take up to 20 days;
Trust management is the optimal solution for large investors, whose main goal is to preserve capital, maintain it free of charge and level the impact of inflation. AME Capitals provides Trust Management services for Accounts over 250,000 USD