Management investment companies are businesses that focus on the purchase, sale, and management of securities as a means of allowing their clients to maximize the potential of their portfolios. The basic operating structure for this type of investment company makes it possible for investors to combine their purchasing power with other clients of the firm and secure interest in groups of diversified securities. As part of the process, the management investment company is responsible for managing the assets on behalf of their clients, always with an eye on enhancing the rate of return enjoyed by each investor associated with a given group of securities.
The concept of a management investment company has been around since the first half of the 20th century. In the United States, the groundwork for this type of investment structure was outlined by the Investment Company Act of 1940. While the identification of this type of investment management strategy as a management investment company is usually associated with investing in the United States, other countries have similar provisions for helping investors pool resources for this type of strategy. As in the US, trading and security regulations in such countries as the United Kingdom, Canada, and France provide the scope of responsibility and usage for any firm that is charged with effectively managing assets on behalf of their customers.
In design, a management investment company is likely to look a great deal like many other types of business organizations. Most will have a corporate executive officer, or CEO, who is supported by a team of officers. These officers then oversee the functions of each department or division within the organization. The typical management investment company will also have a board of directors, with the exact structure of that board depending on the nature of regulations and standards applicable to the country where the company does business. Professionals with a background in finance and investing typically compose the operating staff for the business, which helps to ensure that everyone connected with managing the assets of the firm’s customers are highly competent, and capable of managing research, trade, and other necessary functions with relative ease.
While not the only type of investment company found in most countries, the management investment company is often a good fit for investors who lack the time or the background to manage their own portfolios to best advantage. In addition, the resources of this type of investment firm can often allow investors to participate in investment opportunities that they could never manage to locate or engage without some type of organized support. From this perspective, the management investment company provides a valuable service to the many small investors who are seeking to build investment portfolios as a means of creating a secure financial future.
