Managing investment portfolios through a professional portfolio manager was once the domain of the rich. In recent years, the minimum investment amounts for opening a managed investment portfolio have declined. The possibility has been opened to a wider public.
What is portfolio management, who is it suitable for, and how do you correctly choose the best portfolio management companies and the right portfolio manager for you? All this and more in this guide.
Who is the portfolio manager?
An investment portfolio manager has a license to manage investment portfolios on behalf of the ministry of finance, specializing in managing a portfolio of securities for private clients and companies.
An investment portfolio manager (“portfolio manager”) advises or actually manages his clients’ securities portfolios, following the client’s needs and preferences, and following the terms and characteristics of the capital market and various financial products. Following the regulation of investment consulting and portfolio management law, the best portfolio management services is obligated to the following:
1) Adapt his services to the customer’s needs.
2) Act in the best interests of his clients with faith and diligence (“the duty of trust”).
Other investors, on the other hand, prefer to entrust the investment management of their money to professional entities specializing in the field, believing that they can achieve higher returns for them, or simply because of a reluctance to engage in the issue themselves.
Free capital of nis 150-700,000 – the minimum amounts for investment through a portfolio manager. The minimum amount to invest through a portfolio manager varies from one investment house to another.
Most investment houses will require a minimum amount of nis 300,000, but there are also investment houses where the minimum investment amount is nis 700,000, and other investment houses that also agree to accept clients with nis 150-200,000.
From privately-owned investment houses or owned by the banks and major insurance companies to “boutique companies” for portfolio management.
How do you choose the right case manager for you?
There’s not a single answer to that question. There are several parameters, methodologies, and methods for choosing a portfolio manager. But in practice, the attempt to understand who will be the portfolio manager who will achieve the highest return over time. Depending on the requested risk profile, is nothing more than an informed bet.Ask for an overview of the backgrounds of the investment house managers and the portfolio manager himself, so you can make sure that you put your money in the right hands.
Some important points for correct comparison between past returns of different portfolio managers:
On the other hand, comparing performance to periods longer than 5 years may present the return data of portfolio managers who have long been inactive in the various investment houses. Our recommendation is to focus on choosing an investment house with proven money management capabilities and achieving returns over time, even at the cost of higher management fees by several tenths of a percent.
Full transparency of portfolio management activities is fundamental and necessary today. The investment house’s lack of transparency regarding its activity or portfolio data should turn on a bright red light for customers.