In most basic terms, there are main investment objectives to achieve financial goals:
Capital appreciation: Capital appreciation is concerned with long-term growth.
Current income: If your objective is current income, you are most likely interested in an investment vehicle that pays a consistent and high dividend.
Capital preservation: Capital preservation is a strategy where safety is paramount, even at the expense of return.
Investment is a deliberate exercise to carefully plan, evaluate, and allocate funds to various investment outlets that offer (i) safety of principal and (ii) expected returns over a long period of time. Therefore, understanding your investment objectives is of immense importance. Certain strategies may work well for one objective, but may produce limited results for another objective.
Prudence will concurrently employ several investment strategies to achieve your objectives without conflict. By constructing a coherent investment plan, we are able to develop, operate, maintain, upgrade and dispose of investment assets effectively. We will assist you in all aspects of the administrative, financial, capital and operations of the investment by:
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Establishing, monitoring and maintaining your investment assets,
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Enabling your investment to outperform the market,
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Promoting the economic stability and growth of the value of your investment,
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Providing full-time, dedicated professional management of all aspect of your investment,
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Organizing your investment assets, and maximizing profit potential,
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Creating an efficient operation with ability to track performance,
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Defining and mitigating financial, operational and legal risks, (see Risk Management),
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Devising plan for operational efficiency, stability and sustainability,
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Keeping track of your asset value and affording ways and means for improvement,
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Identifying conducive economic environment for your particular investment,
Real World Example of Investment Management
The top 20 investment management firms control a record 43% of all the global assets under management, according to the Willis Towers Watson report mentioned earlier—some $40.6 trillion worth. In the U.S., the five leading firms include:
Bank of America Global Wealth & Investment Management which, as of 2008, includes Merrill Lynch ($1.25 trillion in AUM)
Morgan Stanley Wealth Management ($1.1 trillion in AUM)
J.P. Morgan Private Bank ($677 billion in AUM)
UBS Wealth Management ($579 billion in AUM)
Wells Fargo ($564 billion in AUM)
Investment Management and Prudence
Depending on client’s inclination, sector preference, investment apatite and the size of the investment fund, Prudence experienced investment strategist prepare proposals for client’s consideration. Such proposals encompass the relevant aspect of the suggested project(s) including:
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The characteristic, features and structure of the suggested investment and its compatibility with client’s objective.
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The projected return on investment,
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SWOT analysis and risk analysis,
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The tax obligations and consequences,
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Regulatory aspect of the investment in a given jurisdiction,
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Marketing analysis,
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Operational characteristics including human capital requirements,
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Exit strategy,
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Other factors relevant to the proposed investment,
Upon acceptance of the principle project, we would engage with investors in a manner consistent with their best interest and ours, typically on one of the following bases:
Joint Venture Partners:
In this scenario, the investor is the Contributing Member of the JV, and Prudence is the Managing Member of the JV.
Following the formation of the JV Agreement, an entity will be established in the agreed jurisdiction for the purpose of carrying out the business of the JV under Prudence management. During the conduct of the activities of the JV, Prudence assumes a fiduciary role.
Investment Managers:
As investment manager, Prudence is the fiduciary of the investment whose role is to invest client’s funds in a manner consistent with the terms of the Investment Management Agreement. Such Agreement will encompass all aspects of the engagement in one or more project(s).
This scenario will also necessitate the establishment of a separate entity expressly for the conduct of the investment activities of a particular client. In all cases, client’s funds are placed in a segregated bank account belonging to the entity, and such funds will not be commingled with other funds belonging to Prudence.
Profit Sharing on Loans:
A unique structure that enables a client to lend his/her/their money to Prudence on profit sharing basis for a specific project with zero risk of the principle loan amount.
Once the project is approved by the client/lender, a ‘Loan and Profit Sharing Agreement’ is established such that the lender is entitled to a percentage of the profit. Once the Agreement is executed, a ‘Loan Repayment Insurance’ is purchased in favor of the lender as collateral for the principle loan amount.