We are here to see Custodian Fund Accounting


A custodian, also known as a custodian bank, refers to a financial institution that holds the possession of customers' securities to reduce the possibility of theft or loss. The securities and other assets can be held in electronic or physical form. Custodians generally will be large, reputable firms since they are responsible for safeguarding the assets worth several million or even billions of dollars.

The Fund Accounting service provided by a custodian falls under the Custodial Services sector. Services like investment accounting for purchases and sales, valuation of securities held under custody, income and expense accounting and regulatory reporting are all covered under this section.


To understand this further, we have to understand some investment options first.

If you are a high net worth individual (HNI) looking to get more out of your capital and are willing to take on additional risks, portfolio management services PMS and Alternative Investment Funds AIF might just be for you.

Both PMS and AIF are private wealth management instruments catered for HNIs as they require higher minimum investment requirements when compared to other investment instruments. Where portfolio management services are focused on building portfolios of listed securities customized to your goals and risk profile, AIFs are pooled investment funds that focus on alternative investment asset classes such as real estate, private equity, hedge funds, and such.


Differences between PMS and AIF

PMSAIF
Pooling of fundsThese are not pooled investment instruments. Investors get personalized wealth management services as per their goals and risk profilesMoney is pooled in from many different investors in order to create a fund, which is further invested in alternative investment classes
Asset classes invested inPMS invests in structured investment instruments such as listed shares of companies, bonds, etc.These are invested in alternative investment classes such hedge funds, private equity funds, real estate, etc. Depending on the type of asset class invested in, SEBI classified AIFs into 3 categories: Category 1, 2, 3.
SEBI-mandated minimum investment amount50 lakhs1 crore
Lock-in periodThere is no specific lock-in period and investors can take out capital as per the terms of the agreement with the wealth managerThere is a specific lock-in period


Comments

Post a Comment

Popular posts from this blog

Scratch of Fund Accounting! - what a regular investment looks like

Image
  In the world of investments a fund manager can use a number of instruments to invest the client's funds, here are a few-  Preferences by popularity and exposure - 1. Equity (Shares)                                                  2. Mutual Fund/ETF 3. Bonds 4. Derivatives (Futures & Options) Will start with Equity investment! When we buy a company's stock, we become a shareholder of that company because we have ownership (or a share) in it. So whenever we trade any stock, the broker will send us the contract note after the market close which contains all the stocks bought by us along with the quantity, cost and price Take a look below - it is a contract note and see the highlighted figures- First you see the name of the stock, followed by the transaction type (buy or sell), volume, gross price, brokerage per share and net price before taxes. And lastly we can see the taxes imposed like STT and GST etc. So here we need to understand two things- Gross Cost and Net Cost, l
Read more