FOREX Trading Online arrow FOREX Basics arrow Investment Management Firms

Investment Management Firms

Investment management firms are financial institutions which accumulate people’s savings by issuing their own securities (equities, units, certificates). After that the firms pass these savings to professional managers to invest them in different assets.

By issuing their own securities investment firms attract finances which later will be invested in the securities of industrial enterprises or other corporations. In order to tie up money investment firms must possess it. Where do they receive it from? The answer is savings that people invest in the investment firm and wait for the refund with a specified interest rate.

At present investment management firms are represented in open and closed types. Investment firms of a closed type launch issuing of their stocks immediately in a definite quantity. A new buyer can obtain them at the market price. Investment firms of an open type produce their stocks gradually expecting new buyers for the purchase. The peculiarity of investment firms is that among the buyers of their securities there increases a rate of financial institutions, industrial or trade companies. Each investor in obliged to pay commissions when obtaining stocks as well as for managing their endowment. The amount of the commissions varies in different companies depending on their financial power and reputation.

Investment firms tie up money not only in national but also foreign securities and bonds which presupposes carrying out currency exchange transactions. Thus, investment companies become serious players on the forex market. For example, an investment manager with an international equity portfolio will need to buy and sell foreign currencies in the spot market to pay for purchases of foreign equities.

An ordinary forex trader can apply to an investment management firm to have his or her forex trading account professionally managed. There are many advantages of it for people who have a full time job and family commitments and who cannot afford time observing the market, assessing the value information it gives and defining when to enter, exit or just observe the market. Another advantage concerns emotional aspects which have clear manifestation in forex trading. A managed account prevents fears, ego feelings, greed frequently overwhelming a trader and helps to supervise the results. One more plus is that a trader can get valuable advice from the person who is savvier in this area clarifying certain aspects and peculiarities of forex trading which will foster the learning process.

Investment management firms handle large accounts of clients. The firms conduct their work on the forex market to assist their securities and to generate profits if their products are large enough in numbers to trade. The firms dispose professionals and experts who focus on the currency overplay operations. The specialists familiarize with various tactics and strategies and employ them in order to get a better result, to limit risks and to reach the main objectives of the clients. The fundamental analysis is considered greatly to identify the strength of a certain currency.

Any investment firm must meet certain requirements to engage on forex. First they must place a minimum capital the amount of which is regulated by the law. In general it is set on the assumption of a risk, either a credit, market or operation one. Then the firms must have a high qualified staff to protect an investor’s deposits and to reach positive results. Moreover, any investment management firm must possess professional software to accompany all the investment deals and transactions on forex.