According to the report of the city of Burs, the stock market is one of the most potential markets for making profit. Many people have been able to earn a lot of profit in this market with their surplus capital in addition to their business. Some also seek to preserve the value of their property against inflation by investing in the stock market. But not everyone has the expertise or time to analyze the stock market and work in it. Using baskets is the choice of many of these people. They can invest part of their assets in the stock market using portfolio management. But what is important in this method is choosing the best stock market manager. So, stay with us until the end of the article to learn more about how to choose the right basket holder.
What is basket management?
Portfolio management is one of the methods of indirect investment in the stock market. In fact, people who do not have the time or expertise to operate in the stock market, have the possibility to profit through portfolio management in the capital market. In this method, the investor provides his capital to the portfolio management company through a formal contract. As a legal entity, the portfolio manager buys and sells stocks and securities in the capital market with the aim of making a profit. In fact, the task of managing the investor’s assets in this method is the responsibility of the portfolio manager.
For portfolio management, companies must obtain the necessary permits from the stock exchange organization, so portfolio management is one of the safe methods of investing in the stock market. But as it was said, the important issue in preserving capital and earning profit is choosing the best stock market manager.
How to know the best stock market manager?
There are many portfolio managers operating in the capital market, and in order to choose the best portfolio manager, it is necessary to examine some of the issues mentioned below.
- Basket operator license
As it was said, companies receive permission from the Stock Exchange and Securities Organization for portfolio management. But some people also operate baskets without a license. In issuing and renewing the portfolio manager’s license, the stock exchange organization examines many issues, such as the appropriate efficiency, the lack of legal errors of the portfolio manager, etc. Therefore, it is better for people to entrust their capital to licensed brokers.
- Efficiency of the basket
It is clear that investors mainly invest with the aim of making a profit. Therefore, the efficiency of the basket maker is one of the most important things in choosing the right basket maker. To check the profitability of basket makers, it is better to check its performance from the beginning until now. You can also see the performance of each in the short-term, medium-term and long-term time frames and choose the most profitable portfolio manager according to your point of view.
- Using an expert and professional team
Due to the fact that in portfolio management, the investor puts his capital at the disposal of someone else, this method can have a lot of risk. Therefore, it is very important that a person entrusts his capital to an experienced and professional team.
The requirement to access the above information in order to check the cartels is their transparency. Therefore, it is obvious that in the first place, the reporting of a cart operator will lead to the possibility of its investigation.
Portfolio managers can publish reports such as daily, weekly, monthly returns, portfolio reports, market reports and economic conditions. In this case, investors can constantly monitor the performance of that portfolio manager, market conditions and how to manage their capital in any situation.
Generally, portfolio managers publish their portfolio (if published) with a week delay. Also, they submit their performance report to the stock exchange organization every 3 months in the form of the average performance of all the portfolios they have.
Minimum capital for portfolio management
Every basket maker has its own rules for basket making. One of these important rules is the minimum capital for portfolio management. Generally, the minimum capital required for portfolio managers with good returns is a high figure (about 1 billion). Therefore, many people will not be able to use the best stock market manager. On the other hand, the high commission that the basket drivers receive, will not be economically justified for small amounts. In the next section, the amount of the portfolio management fee is explained with a simple example.
Portfolio management fee
The portfolio managers receive a fee from the investor according to the concluded contract. The fee received is divided into two parts: fixed and variable. The fixed part generally includes 2% of the total capital. The fixed fee is independent of the return of the investor and is received in any situation, even if the investor makes a loss. For example, a fixed fee of 20 million tomans is charged from a person with 1 billion tomans capital.
The variable part is received if the return of the investor’s portfolio is positive. Basically, the portfolio managers guarantee the capital profit at the rate of bank deposit interest and receive about 25% variable fee from the excess profit earned. (The percentage of the variable fee is different for each broker and it is mentioned in the contract.) So if that person with 1 billion Tomans of capital earns 500 million Tomans profit after one year, in this example up to 200 million Tomans (equivalent to bank interest) is guaranteed. has been Then, out of the 300 million tomans excess profit compared to the bank profit, 75 million tomans belong to Sabedgardan company. Therefore, the basket company receives 95 million tomans out of 500 million tomans as a fee.
Choosing the best stock market manager by paying the lowest cost
According to the above materials, even if the portfolio managers accept the management of small funds, considering the high fees they receive, it does not seem logical to use them. This makes people with low capital less inclined to use portfolio management. Sometimes, due to the lack of expertise and time, these people unknowingly buy and sell stocks by receiving stock market signals from unreliable sources or based on hearsay, and they generally suffer a lot of loss in this situation.
In such a situation, people are suggested to use other reliable authorities similar to the cart operators. For example, the company Enigma, as one of the active companies in the stock market, offers a suggested portfolio of the best stocks on a weekly basis. People can benefit from services similar to basket management for one year by paying a much lower fee than the basket management fee to buy a subscription to this basket. This company has a large team of capital market activists and analysts, and investors can receive free advice from the group’s experts to manage their portfolio this year. What differentiates this collection from other non-reputable cartels and channels is providing daily reports. The performance of this proposed portfolio can be seen in real time on the Enigma website, and people can compare its performance from the beginning until now with the total index and the performance of the best stock market portfolio managers.