The other day, I explained this new trend called “Private Investment Management”. Is it another complex financial product created only to confuse investors? Or is it the new revelation in term of investment and wealth management? I would say that it is something in between the 2 extremes 😉 In fact, I truly believe that this kind of product has its place on the investment market.
It is good for people who like diversification
The important factor about the PIM is that your money is managed by different fund manager specialized and successful in their niche. You have the possibility of selecting the best managers over the past 10 years for each asset class.
Even better, the financial institution offering the product made the research for you. They already took care of selecting from the best performers and they give them mandates to manage additional money according to their philosophy.
It is tax efficient
Most fund managers are trying to be as tax efficient as possible. This means that they do not sell their whole portfolio every year. Every time that a stock is sold within the fund, a capital gain will be triggered (taxed!) and reported to the government. This is why you receive capital gain slips last year even though your funds went down 5% 😉
MER’s fees are not only lower but they are also tax deductible. You will most likely never see a PIM product with MER’s over 2%. Most of them are between 1% and 2%. Don’t we like paying less for getting more?
It is prestigious
Okay, this point has nothing to do with a rational argument. However, wealthy people like terms like “Private Investment Management” or “Wealth Management” or even “Private Banking Services”. Your statement will still show investments and returns, but it will be written in a nice way with a sophisticated presentation.
Clients usually receive more information on what is included in their portfolio. They will get full financial statements with all the stocks and investment products within their portfolio. It is always fun to know what you are holding!
Private Investment Management is obviously not for everybody. I am thinking of independent investors that would hate this kind of product as they have to give away their decision power to someone else. On the other side, how many independent investors are beating the markets? With a PIM, you have more chances of performing well and avoid most of market debacles.
In the end, it is a really good product for those who don’t have the time or the interest in managing their own portfolio and they are wealthy enough to benefit from a well diversified (high class) type of investment product.
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