Investment Association Model Investment Management Agreement: Everything You Need to Know
Investing in the world of finance is not an easy task, especially if you`re an amateur. There are a lot of legal terms and contracts involved in the process. One of those contracts is the Investment Association Model Investment Management Agreement (IAIMA), which is essential when it comes to investment management.
In this article, we`ll delve into the basics of the IAIMA and how businesses can use it to manage their investments.
What is the Investment Association Model Investment Management Agreement (IAIMA)?
The IAIMA is a standardized contract that outlines the agreement between the investment manager and the client. The agreement stipulates the investment management terms and conditions that are fully transparent and fair to all parties involved. It aims to provide a comprehensive and fair basis for the relationship between investment managers and clients.
The contract is provided by the UK`s Investment Association, a trade association for the UK investment management industry. The contract has been drafted for the benefit of investors and is designed to meet the requirements of the Financial Conduct Authority`s (FCA) Conduct of Business rules.
Why should businesses use the IAIMA?
The IAIMA is a standard contract that can be used by any investment management firm. These contracts ensure that the investment manager and client establish a fair and transparent relationship that minimizes any potential conflicts of interest. Additionally, using such a document is a great way to ensure compliance with regulations and best practices.
Furthermore, the IAIMA provides clarity in the relationship between the investment manager and the client. It sets out the scope of services to be provided, how the investment manager will be remunerated, and how any disputes will be resolved.
What does the IAIMA include?
The IAIMA includes a number of provisions that set out the rights and obligations of the investment manager and the client. These provisions include:
1. Investment objectives: The agreement outlines the client`s investment objectives, which involves the types of assets and sectors where the investment manager can invest.
2. Benchmark: The contract includes the benchmark that the investment manager is measured against.
3. Investment guidelines: The agreement outlines the investment restrictions and guidelines that the investment manager must follow.
4. Performance: The contract stipulates how the investment manager`s performance will be evaluated and the procedures for reporting and holding meetings with the client.
5. Fees: The agreement sets out the fees and expenses payable to the investment manager and how these will be charged.
6. Termination: The contract sets out the procedures for termination, the notice periods that must be given, and any termination fees.
Conclusion
In conclusion, the IAIMA is a standard contract that outlines the investment management agreement between the investment manager and client. This agreement is designed to be fair, transparent, and compliant with best practices and regulations.
Using the IAIMA provides clarity in the relationship between investment managers and clients, sets out the scope of services to be provided, how the investment manager will be remunerated, and how any disputes will be resolved. It is an essential document for any business investing in the finance industry, and it is highly recommended to seek the advice of a legal professional before entering into an investment management agreement.