«Private Label Funds» (PLFs) Tailor-made investment fund solutions for family assets. Liechtenstein offers interesting solutions.

Transcription

1 «Private Label Funds» (PLFs) Tailor-made investment fund solutions for family assets Liechtenstein offers interesting solutions Vaduz

2 Agenda Part I Private Label Funds and family foundations 1) Needs of family wealth / FO / trusts / foundations 2) Basics of Private Label Funds 3) Private Label Funds in detail Part II Concrete example of a Private Label Fund for UHNWI 1) Sub-funds and delegation to different asset managers 2) Fund-prospectus: The central document 3) Reporting of a Private Label Fund Part III Liechtenstein and LGT Part IV Summary, contacts and legal information 2

3 Part I Private Label Funds and family foundations 3

4 Needs of family wealth / FO / trusts / foundations Family wealth / FO / trusts / foundations have a need for a general consolidation of assets in a single structure (also with illiquid assets); protection against splitting of the company and against fragmentation of investments; a solution for family branches which face different regulatory and particular tax requirements (different domiciles of family members); a consolidation of existing asset management mandates at several banks (if regulatory requirements are met you can keep existing bank accounts) allowing for different levels and forms (e.g. income or capital gains) of wealth consumption by different family members; involving the appropriate third parties (persons or institutions of confidence to act as directors, asset managers etc.) in managing family assets while maintaining the necessary safeguards and participation; transparency / benchmarking / comparison of different asset managers; integrating the specific requirements of the family in the investment or monitoring process; enhancing privacy and data protection and benefitting from the higher degree of acceptance as well as assurance of disclosure duties which may apply to regulated investment vehicle; 4

5 Needs of family wealth / FO / trusts / foundations Family wealth / FO / trusts / foundations may benefit from control and supervision by independent third parties (auditors, FMA); a possible limitation of their personal liability risks within the regulatory framework as members of the board of trustees; the establishment of a well-structured long-term framework to carry out investments and entrepreneurial activities also after the death of the original founder or controlling owner; an efficient fiscal treatment offered under certain circumstances to regulated investment funds (value added tax, stamp duties, income taxation, use of double taxation agreement); the possibility to enable charity subject to specific conditions (e.g. performance fee in favor of charitable purposes); many more advantages. 5

6 Basics of Private Label Funds 6

7 Basics of Private Label Funds What are Private Label Funds (PLFs)? Investment funds: A collective investment vehicle which may belong to numerous investors and is managed by a professional fund management company (supervised by the FMA). Private Label Funds are just tailor-made investment funds. Name (label) of the fund and particulars are determined by the fund promoter Supervisory Authority Promoter of the fund Cooperation agreement AIFM / Management Company Depositary agreement Depositary (bank) Asset management agreement Under trusteeship Audit Asset manager Investment decision Private Label Fund Auditor Investor Investment Only investments that comply with all regulatory, legal and tax conditions can be invested in a PLF (or in funds in general)! 7

8 Basics of Private Label Funds Enhanced Protection of Private Label Funds Private Label Funds enjoy the same benefits as commercial funds but they are tailored to the needs of the promoter: PLFs benefit from the same degree of protection as public investment funds but are specifically designed to meet the customer s needs (type of fund, legal structure, asset classes, allocation, investment strategies, currencies, use of income etc.). PLFs provide enhanced safeguards due to extensive regulations. Privacy and data security: PLFs act as legal owner and counterpart in all transactions in the interest of its investors (who are not personally involved). Asset protection: The assets and liabilities of a fund are segregated from those of its AIFM/ management company or depositary (off-balance sheet). Separation also applies among sub-funds. PLFs can provide semiannual and audited annual reports, which are filed with the Financial Market Authority. PLFs offer various legal forms under private law. PLFs are generally subject to the same tax rules as public/commercial investment funds in Liechtenstein. PLFs, which qualify as collective investment schemes, do not pay taxes in Liechtenstein (no stamp duties, no withholding taxes in Liechtenstein or the value-added tax). 8

9 Basics of Private Label Funds Flexibility characterizing Private Label Funds (PLFs) PLFs allow flexibility in asset allocation, investment strategies, investment regions, currencies, multimanager-solutions, transactions, asset pooling, subscriptions, redemptions etc. The promoter is free to choose the asset classes held in a PLF (assuming proper NAV calculation is possible and an appropriate legal structure is in place). More credibility due to the recognition of the PLF s regulation by various countries. In fact, Liechtenstein is part of the European Economic Area (EEA) and its funds (as European onshore funds) enjoy an enhanced standing. Convenient transactions: Transactions with a PLF do normally not entail additional amount of effort since the investment funds are regulated 9

10 Basics of Private Label Funds «Trusted Partner» In case the depositary function and administration of the PLF is executed and the asset management is delegated to a third party: The AIFM/management company can represent your interests as a «Trusted Partner». Private Label Funds: For invest solutions in accordance with investment fund laws. Provide flexibility, security and transparency for the fund promoter and investors of the fund. 10

11 Basics of Private Label Funds Advantages for clients with a PLF Clients often change the bank if they are dissatisfied with the investment performance and face the need to establish new client relations, provide documentation and negotiate new contracts which is often time-consuming. Within a fund structure the asset manager can be changed easily at the request of the client/fund promoter. Additional advantages for the client: The client has to find a sound and stable bank and open a PLF just once. Hence, he only goes through the effort of opening an account once. Then, the client is free to choose/change the asset manager (while adhering to regulatory requirements) without having to change the bank relationship. Furthermore, the client can always keep the same relationship. 11

12 Basics of Private Label Funds Legal basis: Acting in the best interest of the investor Art. 20 para. 1 lit. a, b and e UCITS law: The management company shall: act honestly and fairly in conducting its business activities in the best interest of the UCITS it manages and the integrity of the market; act with due skill, care and diligence in the best interests of the UCITS it manages and the integrity of the market; act independently and only in the best interest of the investors in accordance with the laws and constitutive documents. UCITS is an Undertaking for Collective Investments in Transferable Securities (acc. to EU directives). Art. 35 para. 1 lit. b and e AIFM law: The AIFM shall: act correctly and fairly in the best interests of the AIF, the investors and the integrity of the market; comply with all provisions applicable to the conduct of its activities in the best interest of the AIF, the investors and the integrity of the market. AIF is an Alternative Investment Fund (acc. to EU directives). 12

13 Basics of Private Label Funds Set-up: The foundation / trust for all «contracts», the fund for the asset management Founder Combination of two structures By-laws Foundation statutes Board of directors Protector The foundation holds the fund (Private Label Fund) and regulates all agreements (succession plans, distribution of wealth among the beneficiaries). Foundation Beneficiary Fund Assets / Portfolio The PLF holds all (liquid) assets and performs all asset management related tasks. LGT Services LGT does only provide the PLF (i.e. no trust or foundation business by LGT) 13

14 Basics of Private Label Funds An ideal solution: Foundation / trust and PLF LGT Services Co-investors Foundation / trust Board of Foundation PLF Asset Manager Constituting documents/bylaws Prospectus A PLF provides additional options: The founder can hold the PLF by the foundation / or the founder can invest directly in the PLF via an outmost convenient subscription / redemption process. Enhanced flexibility LGT does only provide the PLF (i.e. no trust or foundation business by LGT) 14

15 Private Label Funds in detail 15

16 Fund type Fund structures Private Label Funds in detail Fund structures Self-managed Variable capital SICAV Externally managed Fixed capital SICAF Investment company corporate form Umbrella-fund / Stand-alone fund FUND Share classes Master-Feeder-Structures AIFM / Management Company Contractual form / collective trusteeship EU/EEA-Passport EU/EEA-Passport No EU/EEA-Passport UCITS AIF IU Professional / qualified investors 16

17 Private Label Funds in detail Private Label Fund set-up process Promoter PWC 1 Initial discussion / questionnaire Internal audit (due diligence, viability of project) Offer and order confirmation are signed by client. Cooperation agreement / asset management agreement are signed. Documentation obtained from asset manager. Prospectus drawn up and signed by the depositary and AIFM / management company. FMA 2 Auditor takes mandate 3 Application for authorization submitted to FMA. 4 Technical set-up: Determine subscription period / launch (among others). Quelle: LGT 17

18 Private Label Funds in detail Indicative timeline for fund set-up Project work LGT (Onboarding asset manager, contracts, sign-off etc.) UCITS V approx. 1-5 weeks Alternative Investment Fund (AIF) approx. 1-5 weeks Review prospectus approx. 2 weeks approx. 2 weeks FMA (max. time per law) max. 4 weeks max. 4 weeks Technical implementation approx. 1-2 weeks approx. 1-2 weeks TOTAL TIME 6-13 weeks (normally 7 weeks) 8-13 weeks (normally 9 weeks) Minimum requirements The minimum volume for a Private Label Fund is CHF 20 million. In case of an umbrella-fund, the minimum volume is required for each sub-fund. The asset manager must be licensed and prudentially supervised. LGT does not give any seed money to catch up the minimum volume. 18

19 Private Label Funds in detail What does a Private Label Fund cost? There cannot be a conclusive answer here as costs are affected by factors such as volume, asset classes, valuation cycle etc. One-off costs Set-up costs CHF Authorization fees approx. CHF Existing costs Depositary (custodian) Transaction costs approx bps tbd Incremental costs due to PLF Fund administration approx bps Auditing costs approx. CHF FMA-fees CHF Likely costs: Approx bps per annum plus third-party costs (FMA fees, auditors etc.) A detailed offer can be made once the large questionnaire has been completed. 19

20 Part II Concrete example of a Private Label Fund for UHNWI 20

21 Sub-funds and delegation to different asset managers Different sub-funds of a fund PLF (Umbrella-Fund) Sub-fund 1 Sub-fund 2 Sub-fund 3 «traditional investments» risk averse investments e.g. «hedge funds» or investments with greater risks family companies, private equity, real estate Funds with several sub-funds offer high individualization, especially for foundations, trusts and family wealth. Advantages of a fund with several sub-funds: No liability between sub-funds Sub-funds are segregated and each sub-fund is basically protected in case of over-indebtedness of another sub-fund of the umbrella. Sub-funds as a structural element (e.g. a family sub-fund) Sub-funds can be customized regarding investment strategies, allocation, liquidity, risk, fees, etc. Greater flexibility with investments due to the use of different asset managers in each sub-fund Customizable transfer of assets Sub-funds can include different classes and be subject to different risks profiles Furthermore, they are suitable for family offices. 21

22 Sub-funds and delegation to different asset managers Clear structure according to the liquidity of the asset classes Investors Cash Private Label Fund Sovereign Corporate High Yield Emerging Markets Bond Issues Shares Alternative North America Europe Pacific Emerging Markets Hedge Funds Private Equity 22

23 Sub-funds and delegation to different asset managers Fund structure with delegations LGT Fund Management Company Ltd. Asset Management Agreement Lead Asset Manager Administration Sub-Asset Management Agreement Sub-Asset Management Agreement Sub-Asset Management Agreement Sub-Asset Management Agreement Sub-Asset Manager Sub-Asset Manager Sub-Asset Manager Management Segregated Account Management Segregated Account Management Segregated Account Management Segregated Account Sub-Asset Manager Dynamic Global Endowment Fund FqA PWC Auditor LGT Bank AG Depositary 23

24 Fund-prospectus: The central document 24

25 Fund-prospectus: The central document Prospectus: The entire information, e.g. investment policy 1. Investment objective and investment policy 1.1 Investment objective The investment objective of the sub-fund is to achieve a long-term capital appreciation by investing the sub-fund s assets worldwide in a broadly diversified manner, primarily in traditional asset classes (cash, bonds, stocks), using investment instruments that are typically listed or traded on exchanges or other public markets. There can be no guarantee that the Investor will recover the full amount he initially invested. Unless otherwise agreed for the sub-fund in section 1, the general investment rules in accordance with section 2 shall apply. There is not guarantee that the investment objective will be achieved. 1.2 Investment policy Investment decisions within the segment are made based upon the fundamental assessment of the unit class and issuing institution in each case. The primary investment instruments used are those that fulfil the investment criteria of transparency, profit predictability and dynamism, financial strength, and attractive price level. Depending upon the market situation, there could be larger shifts in the various unit classes within the boundaries of the defined limits. Thus, the entire assets of the sub-fund may be invested in cash positions when market conditions are negative. The sub-fund maintains the following maximum limits for each asset class: Cash positions max. 100% Bonds max. 80% Stocks max. 50% 25

26 Fund-prospectus: The central document Prospectus: The entire information, e.g. basic information Basic information Securities no ISIN no. Suitable as UCITS V target fund Duration Listing Reference currency Currency of account Global Endowment Fund Traditional Share class B LI No Indefinite Minimum investment Equivalent of CHF No EUR EUR Initial issuing price EUR Valuation date Valuation interval Last calendar day of the month Monthly Cut-off time for unit transactions 2:00 pm CET on the second-to-last Liechtenstein bank working day of a month Close of accounting year 31 December, for the first time in 2012 Use of income 4 ACC Costs and commission charged to the investor Max. issuing commission 5% Redemption commission None Max. conversion fees CHF 100 or equivalent 26

27 Reporting Possibilities of a Private Label Fund 27

28 Quarterly Annually Monthly Reporting of a Private Label Fund Reporting Model of institutional reporting Performance, return- and Risk-indicator Performance attribution Qualitative reporting Performance review 28

29 Reporting of a Private Label Fund Reporting Price and Volume (As of: 31/12/2016) Net asset value per share USD 1, month high (end of month data) USD 1, month low (end of month data) USD 1, Returns Fund Benchmark Last month 1.97% -0.63% Last 3 months 1.97% 0.72% Last 12 months 1.86% -0.35% Last 24 months p.a. 4.09% 1.49% Last 36 months p.a. 6.12% 3.94% Last 60 months p.a. Since inception p.a. (31/03/2012) 4.87% 3.50% Year-to-date 1.86% -0.35% Maximum monthly return 3.74% 2.18% Minimum monthly return -3.07% -1.91% Risk and performance Fund Benchmark Volatility p.a. 4.10% 3.50% Sharpe ratio Tracking error 4.88% Information ratio 0.45 Correlation 0.18 Active return p.a. 2.18% Beta 0.21 Maximum draw down -3.07% -4.68% Maximum draw down period (months) 1 4 Calculation: Rolling window of 36 months. Average risk free rate p.a.: 0.05% 29

30 % -0.35% -1.87% -1.91% -0.63% 0.00% 1.33% 3.37% 1.86% 0.00% 0.21% 0.00% 0.00% 0.00% 0.94% 0.42% 6.36% 1.97% 10.30% 9.00% Reporting of a Private Label Fund Reporting Monthly Returns Annual Returns 4.0% 15.0% 2.0% 10.0% 0.0% -2.0% 5.0% -4.0% 0.0% -6.0% 07/15 08/15 09/15 10/15 11/15 12/15-5.0% (03/12-12/12) Performance (rebased) 31/03/ /12/

31 Reporting of a Private Label Fund Reporting Client Fund Traditional (EUR) Risk Currencies 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% Risk Countries 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% USD EUR 26.32% 37.85% Luxembourg* Switzerland* Switzerland 20.52% 14.22% 33.49% CHF JPY 8.26% 17.09% United States Japan Japan* 6.51% 4.37% 4.09% GBP Others 4.00% 6.48% n.a. United Kingdom Others 2.54% 2.27% 11.99% * Emitee country because no risk country is available 31

32 Part III Liechtenstein and LGT 32

33 Liechtenstein and LGT Why Liechtenstein? Legal certainty Clear commitment on the part of the Government to the fund domicile of Liechtenstein EU-compliant legislation, UCITS law, AIFM law (SICAVs, SICAFs, etc.) Simplified distribution authorization in the EU/EEA single market thanks to the EU/EEA-passport EU-wide recognition of the FMA as an equivalent supervisory authority Tax No Liechtenstein tax on the fund assets managed (LUX: up to 5 bps) Purchases and sales of securities for the account of a fund that qualifies as collective investment scheme for stamp duty purposes are not subject to stamp duty Rapid approval procedure Time- and cost-efficient FMA (legally binding time frame) Approval/authorization of complex fund projects within a short time period Rating Liechtenstein has an AAA rating Liechtenstein is the only EEA member with CHF as currency 33

34 Part IV Summary, contacts and legal information 34

35 Summary, contacts and legal information Private Label Funds: tailor-made investment fund solutions Customer needs Segregation and supervision Privacy and data security Trusted Partner Control Private Label Funds (PLF): tailor-made in accordance with investment fund laws Segregation and supervision: PLFs are off-balance sheet, have FMA supervision and PWC audit. Privacy and data security: The PLF acts as legal owner and counterparty in all transactions in the interest of its investors (who are not personally involved). LGT as «Trusted Partner» Control: Bound by the provisions of the prospectus, LGT is obligated to monitor and check all the specifications. Only investments that comply with all regulatory, legal and tax requirements can be invested in a PLF! 35

36 Summary, contacts & legal information Contacts for your private label solution Dr. Stefan Lindemann, LL.M. CEO LGT Fund Management Company Ltd. Tel Dr. Susanne Fabjan Investment Fund Solutions Tel Thomas Marte, LL.M. Investment Fund Solutions Tel

37 Legal information This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer, solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decisionmaking in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future. Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication shall therefore be obliged to find out about any restrictions that may apply and to comply with them. It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such investments, or enter into any other transaction in relation to same. The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA and/or with US citizenship, nor may such securities and rights be transferred to them. 37

38 Legal information This document is for distribution solely to persons permitted to receive it and to persons in jurisdictions who may receive it without breaching applicable legal or regulatory requirements. In particular: in Hong Kong, this document may be issued by either (a) LGT Bank AG, Hong Kong Branch which is an authorized financial institution regulated by the Hong Kong Monetary Authority and the Securities and Futures Commission ( SFC ) or (b) LGT Investment Management (Asia) Ltd. which is a licensed corporation regulated by the SFC, and is intended for distribution, (i) only to professional investors within the meaning of the Securities and Futures Ordinance (Cap 571) and any rules made under that ordinance; or (ii) in other circumstances which do not result in the document being a prospectus as defined in the Companies (Winding up and Miscellaneous Provisions) Ordinance (Cap 32) (the CO CAP 32 ) or which do not constitute an offer to the public within the meaning of the CO CAP 32. in Singapore, this document is issued by LGT Bank (Singapore) Ltd, (Company Registration No E) to accredited investors within the meaning of the Securities and Futures Act (Cap.289). In Dubai International Financial Centre (DIFC), LGT (Middle East) Ltd is regulated by the Dubai Financial Services Authority ( DFSA ). This material is directed to Clients who qualify as Professional Clients under the Rules enacted by the DFSA, and no other Person shall act upon it. The contents of this document have not been reviewed by any regulatory authority in the countries in which it is distributed. You are advised to exercise caution in relation to any information in this document. If you are in doubt about any of the contents of this document, you should seek independent professional advice. The LGT Group, LGT s analysts and/or their associates who were involved in preparing and/or publishing this document may from time to time, have financial interest in the financial instruments, underlying referenced assets or related investments referred to in this document and this may give rise to conflicts of interest that affect the objectivity of this document. This document must not be forwarded, reproduced, redistributed, amended, modified, adapted, transmitted in any form or otherwise made available to any other person without the express consent of LGT. 38

39 Picture description "Portrait of Albert ( ) and Nikolaus ( ) Rubens", c.1626/1627 PETER PAUL RUBENS This double portrait depicts Rubens' sons Albert and Nikolaus, from his first marriage with Isabella Brant, at the age of about 13 and 9 respectively. Nikolaus, the younger of the two, still looks entirely uninhibited - he pays no attention to the viewer and is fully occupied, playing with his goldfinch which he keeps on a string. Albert, by contrast, seems serious, almost grown-up, not least in the casual elegance of his pose. His father had encouraged him to study the classics and the boy published his first Latin poem at the age of 13. Albert Rubens was to become one of the most esteemed classical scholars of his day. LIECHTENSTEIN. The Princely Collections, Vaduz-Vienna 39