Asset Management

An important advantage of the service for the Customers is the possibility to place their means spending nothing on training and payment to the personnel, creation of a necessary infrastructure for monitoring the market condition and accounting of operations performed.

The Trust asset management service is open to private and corporate customers, insurance companies and pension funds.

The essence of trust management is that one party (the trust founder) hands over to the other party (trustee) for a certain period of time money, securities, other assets for their subsequent management on behalf of and in the interests of the trust founder or another person (beneficiary) indicated by the latter in various markets to earn profit. Provided that no transfer of title to the assets transferred from the trust founder to the trustee occurs.

Confidential asset management is carried out in the interests of the trust founder or the person (beneficiary) named by him without association of the property of the trust founder in a uniform property complex with the property of the trustee or other persons, that is the assets of the trustor and the assets of the trustee are accounted for separately.

Aims and priorities of trust asset management

The main objective of trust management is preservation and increment of the customer’s assets at an optimum level of risks. The main principles of management are reliability, safety, liquidity, profitability and diversification.

To achieve the aims of trust management the Bank of Moscow offer includes:

• long experience of the Bank of Moscow in the management of own securities portfolio and the securities portfolios of its customers. As of today the cumulative portfolio in management exceeds 20 bln. roubles
• personal manager and individual approach to each customer
• effective system of risk control
• flexible management of the portfolio, continuous control of the situation in financial markets
• bank commission depending on the financial effects of trust management
• confidentiality of operations
• detailed and regular report on the Customer portfolio status and operations performed for an accounting period.

Objects of trust management

The Bank of Moscow invests the assets of its customers in various derivative instruments both in the stock exchange and over-the-counter financial market segments.

• State securities (GKO — state credit obligations, OFZ — federal loan bonds)
• Eurobonds of the Russian Federation
• Internal state currency loan bonds
• Municipal bonds
• Corporate bonds
• Shares

Remuneration of the Bank of Moscow

The customer shall pay remuneration to the Bank of Moscow for the asset management services consisting of two parts: management fee and success fee. The management fee is calculated as a percent from the average market value of the customer’s assets for an accounting period and makes from 0.75 to 2.0% per annum. The success fee is calculated as a percent from the customer’s asset value increment for an accounting period and makes from 10 to 20%. The trustee’s remuneration is charged and levied regularly upon the expiry of each accounting period.

The minimum amount of investments makes US $ 100,000 or a rouble equivalent, the minimum investment period making 6 months.

Investment declaration and principal investment strategies

At the stage of concluding a trust asset management agreement the parameters to guide the personal manager at forming the investment portfolio are agreed with the customer. The document defining the purposes of trust management, the actions to be taken by the Bank of Moscow in the course of trust management, the list of proper investment objects, structure of assets to be maintained in the course of trust management is the investment declaration.

The customers can independently choose the strategy suitable for them or together with the personal manager develop an individual strategy of investment of their capital depending on the aims, desirable income and degree of admissible risks.

Within the framework of individual trust asset management the Bank of Moscow offers 4 basic and 3 specialised investment strategies allowing the investor to choose the optimum risk / yield parity depending on the amount of the investments, investment horizon and risk propensity.

Basic investment strategies

The basic investment strategies are intended for the investors with the assets from $ 100 thousand and allow the placement of assets for a period of six months or more. The basic investment objects are shares and bonds of Russian issuers. The risk level in these strategies is regulated by the equity investment limits. More...

Conservative strategy.
The purpose of this strategy is PROTECTION OF CAPITAL FROM INFLATION at a minimum possible risk level. Within the framework of the given strategy the customers’ assets are invested mainly in fixed yield instruments. The basis of the investment portfolio is formed by high credit quality subfederal, municipal and corporate bonds. Acquisition of the bonds of the issuers of the 2nd and 3rd echelons, and also shares (only blue chips) is allowed as a means of increase of the general yield of the portfolio in an amount not exceeding 25% of the assets value. The management of the given portfolio is passive; however, depending on the situation in the market the trustees can increase or decrease the share fraction, and also regulate the duration of the debt portion of the portfolio to minimize the market risk. The average expected return of a conservative investment portfolio makes 10—15% per annum. The possible losses in the course of the year are no more than 5—10%. The risk of this portfolio (probability of losses) is evaluated as low. The recommended minimum period of investments is not less than year. The minimum investment amount is US $ 100 thousand. More...

Balanced strategy
The purpose of this strategy is not simply protection of the capital from inflation, but also RECEIPT OF RETURN EXCEEDING THE RATE OF INFLATION. Within the framework of the given strategy the customers’ assets are invested both in fixed yield instruments, and in shares. Equity investments are limited to no more than 50% of the volume of assets in trust. Depending on the situation in the market, the trustees can increase or decrease the share fraction in the investment portfolio. The objects of investment include a wide range of fixed yield instruments (subfederal, municipal and corporate bonds of high and medium credit quality) and shares (blue chips and 2nd echelon issuers). The average expected return of a balanced investment portfolio makes 15—25% per annum. The size of possible losses in the course of the year is no more than 10—15%. The risk of this portfolio (probability of losses) is evaluated as medium. The recommended minimum period of investments is not less than 1—2 years. The minimum investment amount is US $ 100 thousand. More...

Growth strategy
The purpose of the given strategy is RECEPTION OF HIGH RETURN by investment of money mainly in the share market. Equity investments are limited to 75% of the volume of assets in trust; however, depending on the situation in the market, the trustees can decrease the share positions, transferring the assets of the customers in fixed yield instruments and money resources. The objects of investment include a wide range of fixed yield instruments (subfederal, municipal and corporate bonds of high, medium and low credit quality) and shares (blue chips and 2nd echelon issuers). The average expected return of the Growth strategy makes 20—30% per annum. The size of possible losses in the course of the year is not more than 15—20%. The risk of this portfolio (probability of losses) is evaluated as above the medium. The recommended minimum period of investment is not less than 1—2 years. The minimum investment amount is US $ 100 thousand. More...

Aggressive strategy
This strategy is directed at RECEIPT OF A RETURN COMPARABLE TO THE AVERAGE YIELD OF THE SHARE MARKET. At favourable market conditions there may be up to 100% of the assets placed in shares within the framework of the given strategy. Provided that investment objects may include both blue chips and the second echelon, and highly risky companies with small capitalisation. The portfolio management is active, i.e. at obvious aggravation of market conditions the trustees can considerably reduce the share positions, migrating to money resources or fixed yield instruments. However, for the most part of time the assets are invested in shares. The average expected return of an aggressive portfolio corresponds to the average expected return of the share market —  i.e. about 25—30% per annum. The possible losses in the course of the year may reach 30%. The risk of this portfolio (probability of losses) is evaluated as high enough; however, as the investment duration increases, the share market risks significantly decrease, therefore it is recommended to place assets in an aggressive portfolio for not less than 2 years. The minimum investment amount is US $ 100 thousand. More...

Specialised investment strategies

Specialised investment strategies are intended for investors with assets of US $200 thousand and more (Small Cap, " high-yielding bonds«, «capital preservation»). The greatest efficiency of these strategies is achieved at placing the assets for at least 2—3 years. More...

Small Cap Strategy
Beginning with 2006 the Bank of Moscow offers a new highly remunerative strategy — INVESTMENT IN THE SHARES OF SMALL CAPITALIZATION COMPANIES. It is one of the most risky strategies in the share market, but, as experience shows, the most profitable one. Within the framework of the given strategy the customers’ assets are invested mainly in shares, the largest part of the portfolio taken by low liquid shares of the companies of small capitalisation (less than US $ 500 million). The issues are selected for the portfolio on the basis of a careful analysis, preference given to fast-growing companies from promising industries with a rating above the industry average. A specific feature of the given investment portfolio is its low liquidity. The average expected return of the given investment portfolio is within 30—100% per annum. The size of the possible losses in the course of the year is up to 30%. The risk of this portfolio (probability of losses) is evaluated as high enough; however, as the investment duration increases, the share market risks significantly decrease, therefore it is recommended to place assets in an aggressive portfolio for not less than 2 years. The minimum investment amount is US $200 thousand. More...

Investments into high-yielding bonds
The given strategy is directed at RECEIPT OF RETURN ABOVE THE BANK DEPOSIT by investment of assets in high-yielding corporate bonds.

The investment portfolio of such a type has relatively low market risks (risks of interest rate growth) as the securities forming it are characterised by short duration. The credit risks of such portfolio can be evaluated as high enough; however they can be lowered to an admissible level due to high degree of diversification — the portfolio can include dozens of issuers, the fraction of any one issuer not exceeding 1—2%. In this case the possible default of any separate issuer will have no material effect on the value of the portfolio as a whole.

The average expected return of such portfolio at a current interest rate level is evaluated at about 8—15% per annum (depending on the market conditions). The size of possible losses in the course of the year is no more than 5%. The risk of this portfolio (probability of losses) is evaluated as low enough. As the securities in the portfolio have low liquidity, it is recommended to place assets in it for not less than 1—2 years. To achieve high diversification of the portfolio allowing credit risks reduction, it is recommended to invest not less than US $200 thousand. More...

Capital preservation strategy
The capital preservation strategy is intended for conservative long-term investors and GUARANTEESPRESERVATIONS OF THE FACE-VALUE OF THE MONEY INVESTED.

The capital preservation strategy offers to place most money in highest-reliability bonds (federal loan bonds — OFZs, OBR, state companies — Gazprom, RZhD, AIZhK), which are, in fact, no-risk securities. These instruments are acquired for a period of up to maturity, i.e. there is no market risk related to this fraction of the portfolio. The part of the assets invested in the highest reliability rating bonds should allow a return of 100% of the initial value of the portfolio on the bonds maturity. The remaining part of the assets is placed in high-yield instruments, mainly in shares. The return of this part of the portfolio will form the basis for the yield of the whole portfolio; however, even if this part is fully lost as a result of unsuccessful operations (for example, acquired companies become bankrupt, and the cost their shares falls to zero), this will not bring losses to the customer. In this case his portfolio return will equal zero. If, however, operations with the highly risky part of the portfolio are successful, the expected overall yield of the portfolio can make on average 5—15%. To increase the overall yield of the portfolio it is suggested to effect REPO operations against the security of highly reliable liquid bonds.

As the bonds are acquired for a period of up to maturity, this Strategy offers investments for a strictly defined period of time. It is recommended to implement such investment strategy within 2—5 years. The minimum investment amount to form the portfolio according to the given strategy makes US $200 thousand. More...

Information support of the customers of the Bank of Moscow

The customers of the Bank of Moscow are able to receive information on the current situation in the market on the Internet-page of the Bank of Moscow (www.bm.ru) and by e-mail. Besides, there is analytical support offered to customers. They receive the following data sent by e-mail free of charge:

• daily report containing versatile information on the state of Russian and international financial markets and recommendations of the Bank of Moscow analysts
• quarterly reviews including a short-term forecast of the market condition
• analytical reviews of separate industries
• analytical reviews of separate issuers
• personal recommendations of investment advisers of the Bank of Moscow.

Contact persons