Mandate

Key Highlights

• A mandate is like giving someone official permission to handle your money or financial tasks for you.

• Types of investment mandates includes capital preservation, long-term growth, income, balanced, speculative, thematic, geographic, asset class, low turnover and ESG mandate.

What is Mandate in Finance?

A mandate is like giving someone official permission to handle your money or financial tasks for you. It’s a set of instructions that tells a person, bank, or company exactly what they can do with your funds, investments, or payments.

How is it Used?

• Investing: You give your investment manager a mandate—a guide that says how you want your money invested. For example, you might tell them to focus on safe investments, aim for growth, or avoid certain industries like tobacco.

• Banking: A mandate can be an instruction to your bank to handle regular payments, like automatically paying your phone bill or transferring money for loan payments. It can also allow someone else, like a business partner, to manage your account.

• Business Deals: In big financial deals, a company might sign a mandate to let a bank arrange things like selling bonds or securing a loan.

Types of Investment Mandates

1. Capital Preservation Mandate: Focuses on keeping your money safe and avoiding losses.Perfect for cautious investors or those saving for something big soon, like buying a car.

2. Long-Term Growth Mandate: Aims for big gains over time by investing in things like stocks, even if it means taking on more risk. Great for younger investors or those with years before they need the money.

3. Income Mandate: Prioritizes steady cash flow from things like dividends or bond interest. Ideal for retirees or anyone who wants regular payouts.

4. Balanced Mandate: Mixes growth and income by spreading investments across stocks, bonds, and sometimes real estate. Good for people who want a bit of both- some growth, some safety.

5. Speculative or Growth Mandate: Goes for high-risk, high-reward investments, like startups or emerging markets. Best for bold investors who are okay with big ups and downs.

6. Thematic or Sector Mandate: Focuses on specific industries (like tech or healthcare) or themes (like eco-friendly companies). Suits investors who want their money to reflect their interests or values.

7. Geographic Mandates

• International Mandate: Invests only outside your home country.

• Global Mandate: Invests anywhere- home or abroad- for maximum variety.

8. Asset Class Mandates

• Equity Mandate: All about stocks, either worldwide or in specific places.

• Bond Mandate: Sticks to bonds, like government or company debt, for steady returns.

• Mixed Mandate: Combines stocks, bonds, and other assets for a diverse portfolio.

9. Low Turnover Mandate: Limits buying and selling to keep costs and taxes low. Good for those who prefer a "set it and forget it" approach.

10. ESG Mandate: Invests in companies that are environmentally friendly, socially responsible, or well-managed. Perfect for those who want their investments to do good in the world.