What is the difference between an Investment Fund Management Company and a Bank/Credit Institution?
Investment fund management companies are limited liability companies whose business purpose is the management of one or more investment funds, on the exclusive behalf of the fund holders. They also manage a set of assets that belong to third parties. These assets are called portfolios. They are different from a bank in that they don’t take deposits nor do they hold a portfolio in their own name. They are also not allowed to make loans or extend guarantees.
Although investment fund management companies, of which Lynx Asset Managers is one, cannot take deposits, they can engage in a broad range of activities, including:
- Buying and selling any form of securities and exercising the rights directly or indirectly associated with the fund’s underlying assets.
- Issuing participation units and authorising the redemption of these, in collaboration with the depository.
- Setting the value of each participation unit.
- Selecting the securities that will constitute the fund, in accordance with the investment policy set out in their management regulations and carrying out, or giving orders to the depository to carry out, the operations required to fulfil the requirements of this policy.
- Maintaining a written record of accounts for the fund.
- Complying with the reporting duties stipulated by law or the management regulations.
In short, investment fund management companies offer an alternative to the traditional forms of asset management, whether these assets are securities, real estate or take some other form. Such companies can provide fund management skills that are specialised, focused and highly professional.
Just like a bank, investment fund management companies are regulated by Banco de Portugal and the CMVM (Portuguese Securities Exchange Commission).
What does the term “Assets under management” mean?
Assets under management (AUM) equates to the total amount of money that investors have placed with a given management company.
This is an important measure for assessing the performance of management companies, as there is an appreciable quantity of fixed costs involved in the business (from IT systems to regulatory impositions). There is also the commissions structure (particularly the management commission), which tends to be proportional to the overall amount under management.
In other words, an increase in the assets under management tends to have a more than proportional impact on the profitability of the management activity.
Is Lynx Asset Managers associated with any financial group?
LYNX Asset Managers has no links to any financial group and its share capital all comes from within Portugal.
The fact that we are independent allows us to select those financial assets that will most efficiently meet our clients’ needs.
Which bodies regulate the work of Investment Fund Management Companies?
These companies are regulated by Banco de Portugal and by the CMVM.
LYNX Asset Managers carries out its business in accordance with Decree-Law no. 163/94, of 4 June, the General Code for Credit Institutions and Financial Companies and the Portuguese Securities Code.
It is also regulated by Banco de Portugal and by the CMVM.
This regulation involves the company reporting all the required periodic information and regulatory interventions and/or inspections by either of these bodies, with or without prior warning.
LYNX Asset Managers is also a member of the Investor Compensation Scheme.
What commissions does LYNX Asset Managers charge?
As a general rule, Lynx Asset Managers does not charge any subscription or redemption commissions on the funds that we market.
We charge a fixed management commission and a performance commission, in accordance with the fund/strategy each client subscribes to. For further information, please see the company’s price list for investment funds and discretionary management portfolios (by risk profile).