For investors looking to maximise their returns within their chosen risk bracket, the services of an investment firm can be invaluable. The right investment firm strategy will represent the difference between profit and loss – particularly over the longer term, which is where the real investment outcomes become evident.
A well-conceived investment strategy in the right asset classes can offer an excellent financial return over the long term. An investment firm will work individually with its clients to establish their own particular objectives in terms of investment sums and regularity of deposits, preferred asset classes, existing portfolio, investment time frame and taxation position. Consideration will be given to growth versus income strategies or a blend of the two.
The Characteristics of a Good Investment Firm
A good investment firm strategy will deploy capital towards businesses which generate strong cash flows and dividends alongside excellent growth prospects – ideally in sectors which are consumer-driven and proven to be robust. It will back businesses that display sound financial and economic indicators as part of their investment firm strategy and capitalise on the risk-adjusted financial returns that private equities provide as an asset class.
A range of strategies may be employed depending on the situation, such as seed and first-stage start-up financing through to buyouts and growth capital financing. The firm will typically have specialists with key sector expertise in industrial, retail, consumer, technology and other sectors, as well as regional expertise in developed and semi-developed markets and emerging economies.
The focus will not simply be on figures, however – great investment firms also work their networks and relationships hard, leveraging contacts to understand the real story behind figures and to make a broader assessment of a firm’s investment suitability across a range of decision factors.
Considerations for Clients
A client will typically look for a firm that aims to create genuine value in the long term and has an investment strategy that supports this position rather than chasing short-term wins or speculating. Such firms research the management teams of firms they will invest in, ensuring that the business plan is robust and set to deliver measurable value. The firm may also work with business prospects to improve their investment readiness, providing financial and technical oversight and support with corporate governance and reporting. For entrepreneurs, support around target management is provided – a vital area for success to ensure a return on capital invested.
Private investment capital plays a key role in the broader economy and helps it to grow, alongside public funding. It is also an attractive alternative to other more complex and costly options for finance.
Many investment firms will have a focus on a certain region, asset class or sector, particularly if they are boutique providers and wish to concentrate their expertise within certain categories. Larger firms can offer the resources and internal knowledge base to offer team-based specialisms across a variety of sectors, markets and asset classes.