An investment firm is a corporation or trust that invests collective capital of investors in financial securities. Each investor takes a share of the profits and losses of the company with respect to the investor’s financial investment in the firm. They can be either privately or publicly own, that manage, sell and market funds to the general population.
Investment firms are also divided into two categories: mutual funds or close-ended funds. In the former, the shares are considered to be “redeemable”, meaning that if an investor desire to sell his or her share in the company, they can do so by selling it back to the company at the approximate net asset value. In contrast, in close-ended funds, investors have to sell their shares to other investors in a secondary market at a price determined by such market.
Furthermore, investment firms are able to have certain specializations in various sector of the economy. For instance, investment firms can invest in certain businesses, global companies or a specific region. Other specialist investment firms include Venture Capital Trusts, which invests in small companies with high potential for growth, or private equity firms, which invests in the shares of private companies.
Investment firms that are specialized to high-net-worth and businesses will offer a greater level of service and advice than those received by average clients. Since wealthy individuals will for certain face a finite life in contrast to institutions, such investment firms will specialize in localized strategies for estate planning. For both high-net-worth individuals and businesses, investment firms can provide tax and legal specialists to manage their diverse holdings.
Typically, an investment firm is run a fund manager – a person that has the authority to implement a fund’s investing strategy and manage its portfolio trading activities. Money managers like Gregg Hymowitz of Entrust Capital have experience in managing investments and offering financial advice. A fund manager will certainly have the required education and professional experience to qualify for such a position. Since fund managers play a large role in day-to-day operation, they are a key factor in analyzing the investment quality of an investment firm. Potential investors will often look for the long-term investment performance of such a firm in contrast to the tenure of the fund manager.