What is a management company?

Question

Zippia Team · Accepted Answer

A management company is an organization that is created to handle or manage specific resources that are owned by a particular fund. In the investing realm, this kind of company is referred to as a management investment company, and this type of organization has the ability to manage both open-end funds and closed-end funds.

Management companies provide a specific fund with financial services and investments that are typically divided into two parts:

The company takes in and holds the monies from investors
The company utilizes the funds by investing them in accordance with the fund's unique specifications

Management companies are separate entities that determine how the value of a fund will be used for investments. These companies are typically comprised of many financial professionals, including:

Investment bankers
Other investment professionals
Economists
Accountants
Business analysts
Other business experts

These professionals provide service through the advice they give to managers of a specific fund for investment purposes. The management company charges a fee from the fund itself, for services rendered. This fee is typically a portion of the total value of the fund that is currently being managed.