The evolution of servicing within the investment fund industry
Investment funds are investment products created with the purpose of gathering investors’ capital, and investing that capital collectively through a portfolio of financial instruments. In a cross-border environment with an evolving complex regulatory environment, promoters and clients need to master financial and regulatory aspects to structure a fund in an optimized approach. For this reason, they need to find out a valuable partner that helps them in this complex journey going from the structuring of the fund to the daily running of the same and passing for the launch phase. More and more players are looking for integrated partners that can support them across the whole value chain to reduce the administrative burden, and to make the whole process more efficient.
Luxembourg remains the second largest investment fund market in volume behind the United States, There are several advantages to set up a fund in Luxembourg. Luxembourg key features are the long-term stability of the country and ecosystem coupled with a robust regulatory framework, a credible and reputable regulator and a flexible company law regime. With more than EUR 5 trillion in net assets under management, Luxembourg is the largest investment fund center in Europe and the second largest in the world after the US. It is the largest global distribution center for investment funds, with its funds offered in more than 70 countries around the world.
Luxembourg offers both a large product range of UCITS funds and a more and more comprehensive and consistent product range for alternative players willing to distribute their products across Europe and to fully benefit from the marketing passport introduced by the AIFM Directive. Alternative funds range are represented by UCI part II funds, SIF (Specialised Investment Funds), SICAR (Investment Company in Risk Capital), RAIF (Luxembourg Reserved Alternative Investment Fund), ELTIF, EuVECA, EuSEF and SLP (Luxembourg Special Limited Partnership).
Finally Luxembourg is able to cater the needs of the funds industry spanning from back-office to front office services
As Luxembourg Investment Manager for funds we are able to assist promoters and clients in the whole journey answering to their need to find out a “one stop shop” partner.
Why an integrated service?
Post-Covid, it has become more complicated to deal with several counterparties (ie. management company, investment manager, administrator, custodian) as the market consolidated quite aggressively and integration of people is generally more difficult than integration of shares. In addition, while historically management companies were leading the whole process, for similar reasons such processes have been less well managed in several cases. This explains why most fund promoter try to limit the number of players providing service and why they look for a service provider that can make the link between the parties involve and lead the relationships to simplify their life.
Thanks to our extensive and consolidated expertise of more of 15 years in a broad range of asset classes and to our extensive relationship with several actors of the market place we can set up the most effective and efficient wrappers for clients both in terms of fund structure and helping them to find the most suitable counterparties such as management company, custodian bank, fund administrator and auditor.
Through our “Full Service Investment Manager” we are able to build a personalized wrapper based on the fund size, investment objectives/policies and client specific needs offering access to the entire range of Luxembourg fund structures.
During the set up phase we can contribute to the fund structuring leading the project with a dedicated project manager looking for the best counterparties such as management company, custodian bank, fund administrator and auditor. We can also support with our portfolio management experts to define the investment strategy and policy of the fund corresponding to the promoter/client wishes in terms of assets allocation in the best interest of investors.
Once the fund is launched we are able to make primary portfolio allocation and periodical portfolio rebalancing including pre-trade compliance checks. We assure an efficient operational flow within trades execution, trades execution follow up and post-trade compliance checks. On top of the standard services we can also offer the setup of the dedicated Investment Committee, the production of standard and personalized factsheet and KIID and Reports.
Finally we can provide this service with or without third party advisors.
The conclusion is that it is a challenging adventure to set up the right investment fund structure with the right parties and that definitely you need a valuable partner able to assist you in the different steps and phases to avoid to lose time and money. FARAD I.M. can be the answer to your needs.