A homeowner association shortly known as HOA services is really a board of members which are created in order to fulfill the necessary tasks of the neighborhood management. The group consists of volunteered persons who are responsible for successfully attaining the needs of the residents and also to protect the value of the property. Also the person who have certain abilities and have enough time to spend to perform such tasks can be a member. Not all the times these activities will be successfully completed by the board members. Community association services were hired at these situations to handle such necessary activities and to help on maintaining the value of the property. The service of the community association management is wide ranged which requires huge time and effort to spend with. Without enough time and effort these activities results in decreasing the reputation or value of the community. Also professional assistance was available in order to help the board members on handling their day to day activities while they were busy concentrating on the legal and administration.

Formation of Community Association Management

The community association management can be formed by the residents of the neighborhoods. The group members can be elected by the residents and the elected one should have the ability to be volunteered on handling the necessary management activities. For better communication between the residents and the homeowner association management group a website can also be implemented.

The group members will be responsible for the below mentioned activities:

1) Collection of monthly dues

2) Financial planning

3) Penalty enforcement

4) Legal administration

5) Contract administration

6) Organizing board meetings

7) Regular inspections

8) Maintaining effective communication between the residents

9) Dispute settlements

10) Usual administrative activities

The above mentioned were a few and numerous tasks exists. Really it was difficult to handle all the tasks and often it wills results dissatisfaction of the residents. As a fact this will results in the decreased property value and creates a bad reputation for the community. Being a great solution for all these difficulties of the association board members the community association services provides enormous services at their best. While the community association services handles all the day to day regular tasks efficiently the board members will have enough time to concentrate on specific administration areas in order to improve the property values.

Generally there will be a fee for getting assistance from the community association management services. It is better hiring a professional firm so that an experienced individual with enough skills to handle all the regular activities including financial management will be provided. They can also assist the board members on handling difficult tasks much easier. Collection of unpaid dues and discussing the law violations with the neighbors will be the great examples. A professional can be able to easily recover the unpaid dues by utilizing with all their skills. Also the community management services can provide well trained staffs on specific areas such as contractor administration, legal and financial planning.

On ensuring all the regular activities of the board members were covered the community management services helps the board management to focus on the base administration of the neighborhood so that they can have huge amount of time on improving the value of the property. Professional assistance from the community management services is considered as a possibility on financial planning, site management and administrative tasks.

The passive management industry has done an incredible job of projecting their mantra into the investing zeitgeist, and each year we are subjected to claims like “74% of active managers underperformed their index.” Like all good cons, this is not an untrue statement. It is however, an excellent use of misdirection – making implications about passive strategies that are untrue.

“If that many active managers underperform, I guess I’ll just go passive.” This is the inference that the passive industry seeks from the world, and sadly one that the uncritical investor has fallen prey to. The following is not a rejection of passive strategies, but a few thoughts on how to more accurately consider the active vs. passive debate.

Let’s start with an obvious point. It may be the case that 74% of active managers underperform their index in a given year, but what is left unsaid is that if all passive managers are doing their best to follow their investment policy, 100% of them will underperform! Why? Investment strategy returns can be reduced to a reasonably simple equation:

Strategy Return = Market Exposure + Alpha – Fees

So if your alpha is 0% (all passive strategies), and your fees are > $0 (all businesses), then your returns are lower than what pure market exposure would produce. 100% of passive strategies should underperform their indices. 74% isn’t great, but it’s better than 100%.

OVERSIMPLIFIED

Passive managers are well aware that active managers’ returns are a product of their market exposure (Beta), and their skill (Alpha). The fact that the passive industry continues with the ruse of comparing all active managers to a non-risk-adjusted performance figure is deplorable, because it confuses most investors.

Most active managers run less risky portfolios than their index or benchmark. Asset management is risk management, and prudent risk reduction should not be penalized. When sophisticated investors compare managers, they compare risk-adjusted returns. The only way we should be determining an active manager’s value is by measuring alpha generation.

ZERO SUM GAME

Alpha does not exist in nature. If alpha is created in one manager’s portfolio, it necessarily means that another manager has generated negative alpha. Picking the manager that can generate long-term alpha isn’t a trivial exercise, but it is certainly worth the effort considering the impact that the power of compounding over decades has. Even if there is no alpha on average, there are many managers who generate it.

You wouldn’t stop watching the NFL and say, “Another terrible year, on average the league was just.500, again.”

So when is an active manager worthy? Don’t compare returns to an index, compare alpha to expenses. If an active manager generates more alpha than they charge in fees, they are worthwhile. In fact, it is a little easier than that, because the next best alternative to a good manager, indexing, has some costs. So a manager is worthwhile in practice as long as their alpha, less their expenses, is greater than the -10bps associated with passive management fees.

It is more work to analyze managers under this far more accurate framework, but it is absolutely worth the effort. Passive investors are certainly better than active managers’ whose fees exceed their alpha – I just wish they would say that instead of perpetuating their con.