What is trust management? Let's explain in simple words

For asset management, the trustee receives a remuneration, which can be determined in the form of a fixed sum of money or as a percentage of the income received. In addition, the trustee has the right to reimbursement of expenses incurred in connection with transactions in relation to assets.

With trust management, ownership rights remain with the owner of the assets, and the intermediary (trustee) manages them in his interests. At the same time, the powers of the trustee to dispose of assets are not unlimited - the law (or agreement) may provide for restrictions on the performance of certain actions.

The Civil Code of Russia interprets trust management broadly; its objects can be:

• enterprises and other property complexes;
• real estate;
• securities;
• exclusive rights;
• money intended for investment.

An example of real estate trust management. The owner has an apartment in Moscow, but he himself lives abroad. He can enter into a trust management agreement with a real estate company so that it: rents out housing, monitors the safety of the apartment, resolves all issues with residents, and transfers a monthly fee to the owner. The specific obligations of the parties are indicated in the contract. Property management will need to be registered with Rosreestr as a restriction of rights (encumbrance of property).

The most common type of trust management is the management of the client’s money and securities for transactions on the stock market. Only organizations licensed by the Central Bank to work with private investors can manage these assets; they are called management companies.

There are management companies of banks (for example, Sber Asset Management, Alfa Capital), mutual investment funds (UIFs), non-state pension funds (NPF), insurance companies), etc.

Trust management is established in two more cases:

• the need to manage inherited property, for example, shares in a business, shares, securities;
• state and municipal employees who do not want to completely part with their business or securities.

In the latter case, according to the Federal Law “On Combating Corruption,” an official who owns securities (participatory interests, shares in the authorized (share) capitals of organizations) is obliged, in order to prevent conflicts of interest, to transfer the securities (participatory interests, shares in authorized (share) capital of organizations) into trust management.

What is asset trust management

So, the investor transfers funds or assets to a management company (MC), and the latter, on its own behalf, but in the interests of the client, carries out transactions to buy or sell these assets to make a profit. The management company can invest money in stocks, bonds, metals, indices and other assets that can bring income to clients. This is called trust management (TD).

Licenses for the activities of management companies are issued by the Bank of Russia.

Trust management is when a management company, on its own behalf, but in the interests of the client, invests funds in instruments available on the stock exchange.

Deed agreement for property encumbered with collateral

The owner has the right to transfer to the trust the property that is encumbered with a pledge. However, there are nuances here. Article 1019 of the Civil Code of the Russian Federation allows the lien holder to foreclose on the encumbered property. In this situation, the trustee must be informed that the property is encumbered with collateral. The manager, who was not notified of the fact of the encumbrance, can, by law, terminate the management agreement through the court. In addition, if the agreement provides for remuneration, the trustee has the right to demand payment of remuneration for 1 year.

How trust funds are used

To invest funds through a management company, you need to go through three steps.

1. Choose an investment strategy depending on your goals and investment horizon.
2. Register in your personal account of the management company or come to the office to sign an agreement.
3. Transfer your own funds to a trustee.

Qualified and Unqualified Investors: What's the Difference?

Depending on the client’s financial goals and risk appetite, the trustee invests funds in accordance with the strategy approved with the client. The management company can invest in any instruments to generate income within the framework of the rules of trust management, investment declaration and requirements of the Bank of Russia. It should be remembered that past profitability does not guarantee future profitability, since it depends on market conditions, the macroeconomic situation and the asset management strategy of each management company.

Agreement for control of movable property

Movable property includes securities, money, intellectual rights and other property that cannot be classified as real estate. When drawing up a trust agreement for movable property, you should remember that money cannot be a separate object of the trust agreement. But funds can be transferred for management as part of other property. For example, these could be assets of a government organization or a commercial company. This rule does not apply to banks and other credit institutions. They have the legal right to enter into trust agreements for funds with both individuals and legal entities.

What is trust management?

Management companies provide private clients with the following services: mutual investment funds (UIF), individual investment accounts (IIA DU) and individual trust management.

What are mutual funds and what are they?

mutual fund

This is a type of collective investment. Mutual Fund property pools client funds and can be invested in stocks, indices, precious metals, bonds, real estate and other assets. The fund is managed by a management company, and shareholders, in turn, can receive income from these investments. The income received from the increase in the value of the share is distributed among investors in proportion to the number of shares they own. By purchasing a share in a mutual fund, an investor has the opportunity to invest his funds in a variety of assets. Mutual funds are available to a very wide range of investors due to their low entry threshold. So at Gazprombank - Asset Management you can invest in funds online from 1,000 rubles.

IIS is interesting because you can receive a tax deduction in the form of 13% of the amount invested in IIS for the year or not pay personal income tax on income from IIS at all. We have already told you how to receive an investment tax deduction from the state.

IIS DU

An investor can open an individual investment account (DI) and receive investment tax deductions from the state. The management company will manage the funds in the IIS within the framework of the chosen strategy, and the investor can regularly monitor the investment results.

Individual trust management

Individual trust management services, as a rule, are provided to the client upon personal request and specifically tailored to his needs. The entry threshold is higher than for mutual funds: usually at the start you need to invest millions of rubles, as this allows managers to invest in more

wide list of assets.

The client can choose the investment period, the maximum risk that he is willing to accept, as well as the type of instruments in which he wants to invest. A professional from the management company will help you decide on this. The company receives a reward for this.

Gazprombank - Asset Management offers several strategies for individual trust management. Depending on financial goals, profitability and risk criteria, volume and duration of investments, and the current market situation, clients can choose conservative or highly profitable investment options.

By choosing individual trust management, the client can also invest in instruments that are available to the management company as a qualified investor on the stock market: often the profitability of such instruments is much higher, but the risks are also greater.

Why do they open?

Trust accounts are opened to achieve several purposes:

• maintaining anonymity when purchasing or selling assets. Here you should act clearly, under the guidance of an experienced lawyer, since as a result, such anonymity may be regarded by inspection authorities as concealment of property and tax evasion;
• comfortable management of property (financial or real estate) in tandem with other investors - this is precisely the principle by which mutual funds (pension investment funds) work. This practice has existed abroad for decades, but in our country the activities of such organizations are just beginning to develop;
• preserving capital accumulated over a certain period from premature or inappropriate waste (for example, when a child inherits any property and he cannot fully assume his rights before reaching adulthood);
• preservation of property during bankruptcy procedures, however, even here it is worth remembering the fine line between the legal registration of such activities and the concealment of property, which should be used to cover obligations in this case.

In addition to the mutual funds mentioned above, many financial, insurance and even charitable funds operate based on the use of trust accounts. If these organizations have free cash or other assets that are temporarily not used, and there are no people among the management who would take over the management of investment activities upon receiving profit from the use of these assets, then transferring management to financial organizations is correct and reasonable way out of the current situation. For these purposes, a corresponding agreement is drawn up and signed, on the basis of which all operations are carried out.

Assets can be either cash (the simplest option) or securities or shares in other companies. In any case, the owner of this property remains the client who transferred them, but they are managed by the financial institution with his permission.

Why do many people choose to use trust accounts as passive income rather than, for example, a deposit account? Everything is explained quite simply: the interest on the deposit is a constant value and at the moment is not too high. But with the right selection of a manager, you can achieve high profitability rates, much higher than with a deposit.

Checklist: how not to make a mistake with the management company

• Make sure that the company is licensed by the Bank of Russia.
• Look at the value of the net assets under management of this management company. If it’s several hundred billion or more, it means that this company is trusted.
• Read the commission policy.
• Study the profitability of the product or strategy you need, both today and historically. Compare returns with stock indices for these instruments and with products of other companies.
• Read the company's trust rules.
• Formulate questions and ask them to management specialists.

#Management company #For beginners

What is an individual investment account?

Here's another question that new investors often ask. This is one option for using trust accounts owned by an individual. Two types of benefits can be used under this account regarding the reduction of tax payments, however, certain restrictions are imposed on this account.

The opportunity to open such accounts has appeared in our country since the beginning of 2015. It was then that the Russian leadership decided to popularize the ideas of long-term investment in securities among Russian citizens; tax incentives were chosen as a tool. For almost 2 years of the existence of this opportunity, beginners and advanced investors have already opened several hundred thousand such accounts, placing more than 24 billion rubles on them. And if initially the size of such an account cannot exceed 400 thousand rubles, today the legislator has allowed to increase the total amount to 1 million rubles.

How to choose a management company

The activities of the management company are under state control. The company must be properly licensed and certified to officially manage investors' money. When choosing a reliable partner, you should pay attention to the main factors:

1. Availability of a license. Information about it is on the website of the Criminal Code, and you can check the data on the portal of the Central Bank of the Russian Federation.
2. Reliability or credit rating. The best companies are given an A++ or AAA rating. Rating agencies regularly review it, raising or lowering it.
3. The more funds a company has, the wider the range of products and strategies, the better. Large capital allows you to extract increased profits.
4. Income. Objectively, the higher the income, the more profitable the company. You can evaluate it based on historical data, in comparison with the chart of popular indices.
5. The conditions for managing a management company can be completely different; you need to choose not just the lowest commission, but convenient tariffs for yourself.
6. The infrastructure and method of providing services plays a big role; it is more convenient if the company has service offices and remote services are developed.

Wealth management

JSC VTB Capital Asset Management (VTBC UA), (license of the Federal Commission for the Securities Market of Russia dated March 6, 2002 No. 21-000-1-00059 for the management of investment funds, mutual funds and non-state pension funds, without limitation of validity period; License of the Federal Financial Markets Service of Russia dated March 20, 2007 No. 045-10038-001000 for the implementation of securities management activities, without limitation of validity period). The content of the website www.vtbcapital-am.ru and any pages of the website (the “Site”) is intended for informational purposes only. The site is not and should not be considered as an offer by VTBK UA to buy or sell any financial instruments or provide services to any person. The information on the Site cannot be considered as a recommendation to invest funds, as well as guarantees or promises of future investment returns. Nothing in the information or materials presented on the Site constitutes or should be construed as individual investment advice and/or the intention of VTBK UA to provide the services of an investment advisor. VTBK UA cannot guarantee that the financial instruments, products and services described on the Site are suitable for persons who have read such materials in accordance with their investment profile. Financial instruments mentioned in the information materials of the Site may also be intended exclusively for qualified investors. VTBK UA is not responsible for financial or other consequences that may arise as a result of your decisions regarding financial instruments, products and services presented in the information materials. No financial instruments, products or services mentioned on the Site are offered for sale or sold in any jurisdiction where such activity would be contrary to securities laws or other local laws and regulations or would subject VTBK UA to compliance with requirements registration in such jurisdiction. In particular, we would like to inform you that a number of states have introduced a regime of restrictive measures that prohibit residents of the relevant states from acquiring (assisting in the acquisition) of debt instruments issued by VTB Bank. VTBK UA invites you to ensure that you have the right to invest in the financial instruments, products or services mentioned in the information materials. Thus, VTBC UA cannot be held liable in any way if you violate the prohibitions applicable to you in any jurisdiction. Before using any service or purchasing a financial instrument or investment product, you must independently assess the economic risks and benefits of the service and/or product, tax, legal, accounting consequences of entering into a transaction when using a specific service, or before purchasing a specific financial instrument or investment product, your readiness and ability to accept such risks. When making investment decisions, you should not rely solely on the opinions expressed on the Site, but should conduct your own analysis of the financial position of the issuer and all risks associated with investing in financial instruments. Neither past experience nor the financial success of others guarantees or determines the same results in the future. The value or income from any investments mentioned on the Site may change and/or be affected by changes in market conditions, including interest rates. All figures and calculations on the Site are provided without any obligation and solely as an example of financial parameters. VTBK UA is not responsible for any losses (direct or indirect), including actual damage and lost profits, arising in connection with the use of information on the Site. This Site does not provide and is not intended to provide legal, accounting, investment or tax advice and you should not rely on the contents of the Site in this regard. VTBK UA makes reasonable efforts to obtain information from sources it believes to be reliable. However, VTBK UA does not make any representations that the information or estimates contained in the information material posted on the Site are reliable, accurate or complete. Any information presented in the materials of the Site may be changed at any time without prior notice. Any information and assessments provided on the Site do not constitute conditions of any transaction, including potential ones. VTBK UA does not guarantee the profitability of investments, investment activities or financial instruments. Before making an investment, you must carefully read the conditions and/or documents that govern the procedure for its implementation. Before purchasing financial instruments, you should carefully read the terms and conditions of their circulation. VTBK UA hereby informs you of the possible existence of a conflict of interest when offering financial instruments considered on the Site. A conflict of interest arises in the following cases: (i) VTBK UA is the issuer of one or more financial instruments in question (the recipient of the benefit from the distribution of financial instruments) and a member of the VTBK UA group of persons (hereinafter referred to as the group member) simultaneously provides brokerage services and/or trust management services (ii) a group member represents the interests of several persons simultaneously when providing them with brokerage, consulting or other services and/or (iii) a group member has his own interest in carrying out transactions with a financial instrument and simultaneously provides brokerage, consulting services and/or (iv) the group member of the group, acting in the interests of third parties or the interests of another group member, maintains prices, demand, supply and (or) trading volume in securities and other financial instruments, including acting as a market maker. Moreover, group members may have and will continue to have contractual relationships for the provision of brokerage, custody and other professional services with persons other than investors, and (i) group members may receive information of interest to investors and participants the groups have no obligation to investors to disclose such information or use it in fulfilling their obligations; (ii) the conditions for the provision of services and the amount of remuneration of group members for the provision of such services to third parties may differ from the conditions and amount of remuneration provided for investors. When resolving conflicts of interest that arise, VTBK UA is guided by the interests of its clients. More detailed information about the measures taken by VTBK UA regarding conflicts of interest can be found in the VTBK UA Conflict of Interest Management Policy posted on the Website. Open-end mutual investment funds managed by JSC VTB Capital Asset Management: Open-ended investment fund RFI “VTB - Share Fund” (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0968-94131582); Open Investment Fund RFI "VTB - Balanced Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0962-94131346); Open Investment Fund RFI “VTB – Eurobond Fund of Emerging Markets” (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0958-94130789); Open Investment Fund RFI “VTB – Fund of Small and Medium Capitalization Companies” (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0959-94131180); Open Investment Fund RFI “VTB – Moderately conservative fund. Rubles" (Rules of the Fund were registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0966-94131263); Open Investment Fund RFI "VTB - Electric Power Fund" (Rules of the Fund were registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0965-94131501); Open Investment Fund RFI "VTB - Future Technologies Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0967-94131429); Open Investment Fund RFI "VTB - Metallurgy Fund" (Rules of the Fund were registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0961-94131104); Open Investment Fund RFI "VTB - Eurobond Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0963-94130861); Open Investment Fund RFI "VTB - Oil and Gas Sector Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0960-94131027); Open Investment Fund RFI "VTB - World Premium Brands Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 13, 2007, No. 0964-94130944); Open Investment Fund RFI “VTB – Equity Fund of Developing Countries” (Fund Rules registered by the Federal Securities Commission of Russia on August 11, 1997, No. 0012-46539678); Open Investment Fund RFI "VTB - Global Dividend Fund" (Fund Rules registered by the Federal Securities Commission of Russia on February 26, 2003, No. 0090-59893176); Open Investment Fund RFI "VTB - Treasury Fund" (Fund rules registered by the Federal Securities Commission of Russia on February 26, 2003 No. 0089-59893097); Open Investment Fund RFI "VTB - Moscow Exchange Index" (Fund rules registered by the Federal Securities Commission of Russia on January 21, 2004 No. 0177-71671092), Open Investment Fund RFI "VTB - Bond Fund. Responsible investments" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 25, 2007, No. 0997-94132239); Open Investment Fund RFI “VTB – Equity Fund. Responsible Investments" (Fund Rules registered by the Federal Financial Markets Service of Russia on September 25, 2007, No. 0998-94132311); Open Investment Fund RFI “VTB – Mixed Investment Fund” (Fund Rules registered by the Federal Securities Commission of Russia on 03/05/2003, No. 0092-59891904); Open Investment Fund RFI "VTB - Gold Fund" (Fund Rules registered by the Federal Financial Markets Service of Russia on March 31, 2009, No. 1407-94156211); Open-end mutual fund of market financial instruments "Post Bank - Gold" (Fund Rules registered by the Central Bank of Russia on 04/09/2020, No. 4009) ), open-end mutual fund of market financial instruments "VTB - Money Market Fund. Rubles" (Fund rules registered by the Central Bank of Russia on August 20, 2020, No. 4138), open-end mutual fund of market financial instruments "VTB - Money Market Fund. Dollars" (Fund Rules registered by the Central Bank of Russia on August 24, 2020, No. 4127), Open-ended mutual investment fund of market financial instruments "VTB - Global Allocation Fund" (Fund Rules registered by the Central Bank of Russia on June 7, 2021, No. 4452), Open-end mutual investment fund of market financial instruments instruments “VTB – Moderately conservative fund. Dollars" (Fund Rules registered by the Central Bank of Russia on 06/07/2021, No. 4453), Open-ended mutual investment fund of market financial instruments "VTB - Bond Fund. Russian issuers" (Fund Rules registered by the Central Bank of Russia on October 28, 2021, No. 4665), Open-end mutual investment fund of market financial instruments "VTB - Equity Fund. Russian issuers" (Fund Rules registered by the Central Bank of Russia on October 28, 2021, No. 4666). Exchange-traded mutual investment funds managed by JSC VTB Capital Asset management: BPIF RFI "VTB - Russian Corporate Bonds Smart Beta" (Fund Rules registered by the Central Bank of Russia on January 31, 2019, No. 3647), BPIF RFI "VTB - American Companies Equity Fund" (Fund Rules registered by the Central Bank of Russia on May 28, 2019, No. 3735), BPIF RFI “VTB – American Corporate Debt Fund” (Fund Rules registered by the Central Bank of Russia on 06.27.2019, No. 3754), BPIF RFI “VTB – Equity Fund for Emerging Countries” (Fund Rules registered Central Bank of Russia 06/27/2019, No. 3755), BPIF RFI “VTB – Corporate Russian Eurobonds Smart Beta” (Fund Rules registered by the Central Bank of Russia 11/19/2019, No. 3906), BPIF RFI “VTB – Liquidity” (Fund Rules registered by the Central Bank of Russia 11/28/2019). 2019, No. 3915), BPIF RFI “VTB – Moscow Exchange Index” (Fund rules registered by the Central Bank of Russia on February 10, 2020, No. 3965), BPIF RFI “VTB – Gold Fund. Exchange" (Fund rules registered by the Central Bank of Russia on May 14, 2020, No. 4038), BPIF of market financial instruments "VTB - Eurobonds in Euro smart beta" (Fund rules registered by the Central Bank of Russia on 09.10.2020, No. 4158), BPIF of market financial instruments "VTB - Fund "American Corporate Debt - Investment Rating" (Fund rules registered by the Central Bank of Russia on June 10, 2021, No. 4460), BPIF of market financial instruments "VTB - Fund for Sustainable Development of Russian Issuers" (Fund rules registered by the Central Bank of Russia on August 23, 2021, No. 4568), BPIF of market financial instruments “VTB – Fund for Shares of European Companies” (Fund rules registered by the Central Bank of Russia on October 18, 2021, No. 4660). “Moscow Exchange Index” and “Moscow Exchange Corporate Bond Index” are stock indices calculated by PJSC Moscow Exchange. The copyright holder of the Trademarks “Moscow Exchange Index” and “MOEX” is PJSC Moscow Exchange. Moscow Exchange PJSC does not give any guarantees or assurances to third parties about the advisability of investing in VTBK UA financial products based on indices calculated by Moscow Exchange PJSC. The basis for the establishment of relations between Moscow Exchange PJSC and VTBK UA is the provision of a non-exclusive license to use the Moscow Exchange Index and MOEX Trademarks. The Moscow Exchange Index and the Moscow Exchange Corporate Bond Index, calculated by PJSC Moscow Exchange and which is directly associated with the Moscow Exchange Index Trademark, were created, calculated, and maintained without reference to VTBK UA and its business activities. The value of investment shares may increase and decrease, past investment results do not determine future income, and the state does not guarantee the return on investments in mutual funds. The rules of trust management of mutual investment funds managed by VTBK UA may provide for premiums (discounts) to (c) the estimated value of investment shares upon their issuance (redemption). Charging premiums (discounts) will reduce the return on investment in investment fund units. Before purchasing an investment share, you should carefully read the rules of trust management of the fund. There is a possibility of complete loss of the initially invested amount. Data on profitability or other results reflected on the site do not take into account commissions, taxes and other expenses. You can obtain information about the Funds and familiarize yourself with the Rules of Trust Management of the Funds, with other documents provided for by the Federal Law “On Investment Funds” and regulations in the field of financial markets at the address: Russia, 123112, Moscow, vn.ter.g. municipal district Presnensky, Presnenskaya embankment, building 10, building 1, floor 38, room I, by phone 8-800-700-44-04 (for free long-distance and mobile communications), at agent addresses or on the Internet at www. vtbcapital-am.ru. VTBK UA does not warrant that the operation of the Site or any content will be uninterrupted or error-free, that defects will be corrected, or that the servers from which this information is provided will be protected from viruses, Trojan horses, worms, software bombs or similar items or processes or other harmful components. Any expressions of opinions, estimates and forecasts on the site are the opinions of the authors as of the date of writing. they do not necessarily reflect the views of VTBC UA and are subject to change at any time without prior notice. Under no circumstances will VTBK UA be liable for any indirect, incidental, special, punitive or consequential damages (including, without limitation, damages for loss of data, business or profits) arising out of or in connection with these terms, for inability to use The Site or any products, services or content purchased, obtained or stored on the Site, whether based on contract, tort, liability or otherwise, even if VTBK UA has been advised of the possibility of such damage, and notwithstanding any remedy at law does not achieve its main goal. Without limiting the foregoing, these limitations also apply to any claims of third parties against users. Notwithstanding any other statement, nothing in these terms is intended to exclude or limit any duties or obligations that VTBC UA has to its customers under applicable law, or which cannot be excluded or limited under applicable law.