Introduction
There are no doubts in perspectives of the unit investments market. Less than 2% of the population in Russia is registered as unit-holders of unit investment funds, while in the developed countries this indicator changes in the range of 30-70%. Naturally, this difference between Russia and the developed countries will be gradually reduced, and the incomes of the management companies will grow with growth of demand for their services, too. Thus, creation of the management company has brilliant perspectives.
In the years of their existence in Russia, unit investments funds have shown a positive dynamic in growth of their net assets. However, once growth of NAV is analyzed the following conclusions may be reached. A rapid growth of net assets of mutual funds since 2001 was determined by market growth. Investors were redeeming their money from interval stock funds and open-end bond funds, preferring to invest in open stock funds and mixed investment funds. Thus, the main reason for growth of NAV of mutual funds in last years was not only the inflow of funds from investors, but also the dynamic growth of the Russian securities market.
While there is no direct connection between the assets volume of investment funds and macro-economic indicators, such as capitalization of the securities market or the volume of savings, there is a general trend for all countries that shows growth of share of the investment funds assets in GDP. As indicated by the data of European federation of investment funds and companies (FEFSI), an indicator “assets of funds/GDP” increased in Europe in the past 5 years by 2,3 times. Meanwhile there is an 8 fold difference in this indicator across countries: from 6% in Germany to 46% in USA. In Russia, according to experts, the optimal indicator “assets of funds/GDP” should be around 6%. [17]
3. Organizational and Legal Status of Management Company
Alliance for Investment Research Management Company (hereinafter short title – AIR Management) is the new asset management company starting for the trust management of some unit investment funds.
The order of the management company registration is stipulated by Federal Law on the State Registration of Legal Entity and Individual Businessmen.
The main requirements to the management company include:
- An asset management company can be registered in the form of Open Joint-Stock Company, or Closed Joint-Stock Company, or Limited Liability Corporation, according to the laws of Russian Federation,
- There is not the Russian Federation, regions of the Russian Federation, municipal formations among participants,
- Licensed activity can be overlapped only with activity on trust management of securities and activity on management of the insurance reserves of insurance companies.
AIR Management was created as a limited liability corporation because of special requirements for the creation and activity of joint-stock companies (registration of the equities issue, etc.), which could delay starting of business.
AIR Management Ltd formed its ownership capital in the amount of 40 millions rubles, according to Decision of the Federal Financial Markets Service on Approval of the Sufficiency Norms of the Ownership Capital. Besides, the company should take into account that its ownership capital should be not less than 60 millions rubles after July 1, 2010. [10]
At the formation of its ownership capital and decision about participants, the company took into account that the founders owning of 5 and more per cent of the ownership capital, cannot be:
- Legal entity at whom the license of the financial organization has been cancelled for infringement or the license of the financial organization has been cancelled at the basic or prevailing founders of this company,
- Individuals, subjected to the official penalty in the form of the disqualification, having a previous conviction or supervised the organization at which the license has been cancelled.
List of Reference
1. Federal Law No. 156-FZ of November 29, 2001 On Investment Funds/Trusts (with the amendments and additions of June 29, 2004, April 15, 2006, December 6, 2007, July 23, 2008)
2. Decree of the Government of the Russian Federation No. 564 of July 25, 2002 on the Model Rules of Trust Management of a Closed Unit Investment Fund (with the amendments and additions of May 13, 2005, November 13, 2006, September 1, 2008)
3. Decree of the Government of the Russian Federation No. 633 of August 27, 2002 on the Model Rules of Trust Management of an Open Unit Investment Fund (with the amendments and additions of May 13, 2005, November 13, 2006, October 27, 2008)
4. Decree of the Government of the Russian Federation No. 684 of September 18, 2002 on the Model Rules of Trust Management of an Interval Unit Investment Fund (with the amendments and additions of October 24, 2002, May 13, 2005, November 13, 2006, December 24, 2008)
5. Decision of the Federal Commission for Securities Market No. 03-41/ps of October 22, 2003 on the Reporting of the Joint-Stock Investment Fund and the Reporting of the Management Company of the Unit Investment Fund
6. Decision of the Federal Commission for Securities Market No. 04-3/ps of February 10, 2004 on the Regulation of Activity of Specialized Depositories of Joint-Stock Investment Funds, Unit Investment Funds and Non-State Pension Funds
7. Decision of the Federal Commission for Securities Market No. 04-5/ps of February 18, 2004 on the Regulation of Activity of Management Companies of Joint-Stock Investment Funds and Unit Investment Funds
8. Decision of the Federal Financial Markets Service No. 06-125/pz-n of November 2, 2006 on the Minimum Property Value Making up a Unit Investment Fund upon Whose Attaining the Unit Investment Fund is Considered Established
9. Decision of the Federal Financial Markets Service No. 07-37/pz-n of April 3, 2007 on Approval of the Procedure for Securities Management Activity
10. Decision of the Federal Financial Markets Service No. 07-50/pz-n of April 24, 2007 on Approval of the Sufficiency Norms of the Ownership Capital of the Professional Securities Market Makers and the Management Companies of Investment Funds, Unit Investment Funds and Non-State Pension Funds (with the amendments and additions of October 23, 2008, July 30, 2009)
11. Decision of the Federal Financial Markets Service No. 08-17/pz-n of April 15, 2008 on Registration of Rights to Investments Units of Unit Investment Funds
12. Decision of the Federal Financial Markets Service No. 08-19/pz-n of May 20, 2008 on Approval of the Regulation on the Composition and Structure of the Assets of Joint-Stock Investment Funds and of the Assets of Unit Investment Funds (with the amendments and additions of September 23, 2008, April 2, 2009)
13. Decision of the Federal Financial Markets Service No. 08-41/pz-n of October 23, 2008 on Approval of the Regulations on the Procedure for the Calculation of the Ownership Capital of the Professional Securities Market Makers and the Management Companies of Investment Funds, Unit Investment Funds and Non-State Pension Funds
14. Letter of the Federal Financial Markets Service No. 05-ov-01/4644 of March 30, 2005 on the Professional Ethics Codes of Management Companies, Specialized Depositaries, and Brokers Carrying out Their Activity Connected with Formation and Investment of Pension Resources
15. Letter of the Department of the Federal Tax Service for the city of Moscow No. 24-14/44072 of July 05, 2004 on the Procedure for Taxation of Unit Investment Funds
16. Bondarchuk E. Investment Funds // Economics and Finance, March 24, 2008, No.12 (157).
17. Goriaev A. The Mutual Fund Industry in Russia: Beyond the Stage of Initial Growth// Beyond Transition Newsletter, 2008, No.2.
18. Insights & Views from PricewaterhouseCoopers’ Global Asset Management Practice // Asset Management News, September 2009. http://www.pwc.com/gx/en/asset-management/publications/library.html
19. Mrochkovsky N. Involve and Manage.//Business-Magazine, June 19, 2007, No.12.
20. Opportunities in Adversity: Accelerating the Change for Financial Services Organizations // Ernst & Young Report, 2009. http://www.ey.com/opportunities-in-adversity
21. Review of Investment Funds Risks in Russia // Maxwell Capital Group, 2009. http://www.maxwell.ru/unit-investment-trust/open-unit-funds/maxwell-capital/investment-risk.aspx
22. Sedash T. Mutual Fund Investing – One of the Main Ways of Saving for Retirement in Russia // Working Paper Series, 2006, No. 166.
23. www.nlu.ru – National League of Management Companies.
24. www.investfunds.ru – the project of Information Agency Cbonds.ru.
25. www.fsfm.ru – Federal Financial Markets Service.