Wealth management

CEEAAM offers individual professional wealth management services to private, corporate and institutional customers. Our goal is to preserve the value of wealth under management and to reach the highest attainable yield within the boundaries set by the investment policy.

Trust

CEEAAM places the greatest importance on building personal relationships with its clients and achieving its goals while maintaining the highest level of discretion. The investor, who is a client of our wealth management service, is always an individually identifiable entity, regardless of their affiliations. The wealth under management is a well-defined group of financial assets that are linked to a certain investor. CEEAAM keeps an accurate and up-to-date record of the holdings of each investor; this record is strictly separated from the company’s own assets. Our investors are regularly informed about the composition of their portfolios, about our activity and the results.

Personal Relationship

A company's staff is the most important asset for all financial service providers. This is especially true for wealth managers. There exist two types of wealth managers: the large-scale and the small-scale producers. Commercial banks represent the first category, whereas independent financial service providers like CEEAAM represent the second type. The goal of universal banks is to obtain a market leader position and to please shareholders by maximizing profits in the short term. This short stance view results in a high number of heavily fluctuating staff.

Our clients demand a personal fiduciary business relationship with us and insist on long-term cooperation with the same trusted person. CEEAAM puts great emphasis on exceeding the expectations of its clients. To that end, CEEAAM works with a select number of stable employees whom it retains on a long-term basis. The employees of the company are highly skilled professionals with over ten years of market experience.

Objective performance measurement

The objective gauge of our activity is the reference index, as defined in the portfolio management contract. The performance of CEEAAM can be measured by the difference between the benchmark and the realized yield. Our customers may compare the extra return achieved by CEEAAM to the figure reached by our competitors, so they can then decide on extending our mandate or withdrawing funds.

Portfolio management mandate types

We differentiate two types of portfolio management types depending on the decision making autonomy of the portfolio manager: discretionary and non-discretionary portfolio management.

Non-discretionary portfolio management

The non-discretionary portfolio managers manage the funds in accordance with the directions of the clients who keep total control of their portfolios. The non-discretionary portfolio management provides access to the investment management team of CEEAAM, leaving the client an opportunity to understand the rationale and details behind every investment decision.

Discretionary portfolio management

In case of a discretionary management mandate, the investment managers at CEEAAM make buy or sell decisions without referring to the account holder for every transaction. Even in case of discretionary portfolio management, the portfolio managers must obey the investment limits that are described in the investment policy agreed upon with the client.

Investment Policy

Before signing the portfolio management contract with our clients, we hold initial discussions that allow both our clients and the portfolio manager to learn about one another. We gather information like financial circumstances, current holdings, investment goals, income needs, risk tolerance, investment horizon, tax status, anticipated withdrawals or deposits, educational background, and former experience with financial products, and in exchange our clients are informed about CEEAAM’s investment philosophy and practices. As a next step, we create a written investment policy that contains a full list of issues and policies that our portfolio managers need to follow. The ISP determines the asset classes that can be represented in the portfolio, the basic allocation among asset categories and the rebalancing limits for this allocation. Any constraints and restrictions on assets, such as liquidity and marketability requirements, and diversification concentrations are also mentioned in a written form. The investment policy statement becomes part of the portfolio management contract and serves as a guarantee for the client.

Asset classes

As mentioned above, the wealth management contract in the investment policy statement defines the group of investment vehicles that can be selected by the portfolio managers. Investments with unidentified risk characteristics should not be among the elements of the portfolio. The aim of CEEAAM is to find the optimum balance between the three major asset classes, namely equities, bonds and money market instruments, which is in line with the risk attitude, present and future financial situation and investment horizon of our client.

• Money market instruments

  In general, debt obligations with shorter than one year maturity, treasury bills backed by the government, short-term corporate zero coupon bonds and least risky liquidity investment funds are mentioned as money market instruments.

• Bonds

  Fixed income instruments are understood to be government bonds, bonds issued by central banks or supranational organizations, corporate bonds and mortgage securities. Debt obligations issued by banks, municipalities, convertible bonds, perpetuals, and hybrids are also members of this asset class.

• Equities

  Hungarian shares (listed on the Budapest Stock Exchange), shares listed on the regional exchanges like Prague, Warsaw, Zagreb, Ljubljana, Bucharest, Bratislava all belong to the equities asset class. Also, shares of companies based in Russia, Turkey and the Baltic countries are classified as regional investments. Global stocks listed on the major international stock exchanges (NYSE, Deutsche Boerse, Euronext, LSE) and the emerging market hubs like India, China and South Korea can also be selected for this asset class. CEEAAM realizes investments also in the form of exchange traded funds.

Alternative asset classes

Investments in commodities like gold, metals, energy or agricultural products are included in this class. Besides commodities, real estate investments, foreign exchange products and hedge funds are classified among alternative assets. CEEAAM realizes these types of investments in the form of certificates or warrants.

Tailor-made solutions

The portfolio management contracts can be customized to meet our clients’ needs as far as maturity and composition are concerned. We believe that a mandate for at least three years is ideal; our investors may determine shorter periods as well. The benchmark portfolio might be a custom-built security basket, a global equity or bond index, or a commodity index. Our clients can withdraw funds from their portfolios when needed or they can deposit funds if they have free liquidity to invest. However, unexpected transfers may influence the realized yield on the portfolio in an adverse way. We suggest establishing a withdrawal/ deposit structure beforehand. (For example, the reimbursement should be yield-optimized, fixed minimum yield, regular withdrawals etc.)

Fees

Our fee structure consists of two parts: a fixed management fee and a performance fee. The management fee is calculated as an annual percentage of the funds managed, whereas the performance fee is a percentage of the portfolio's profits, usually counting both realized and unrealized profits.