A management company makes decisions about the composition of investments in the interests of clients — within an investment fund or under an individual trust management agreement. The assets remain the property of investors and are separated from the company's own assets.
Compensation typically consists of a management fee charged regardless of results, and sometimes a performance fee when a set benchmark is exceeded. Expenses reduce returns each year and are therefore significant over a long horizon.
Key limitation: a management company cannot guarantee returns. Any promises of fixed income under trust management contradict the nature of the service and are a sign of bad faith.
When choosing, it makes sense to look at the presence of a license, an investment declaration describing permitted investments and restrictions, the full fee structure, and the procedure for withdrawing funds. Past performance is informative only when compared to the corresponding benchmark for the same periods.