US EAST COAST 2012 - HFMWeek

US EAS T COAS T 2012
FUND SERVICES
and subsequent exemptions provided, to manage
a 40 Act alternative mutual fund, a hedge fund
sponsor is required to become an SEC-registered
investment advisor.
Launching an alternative mutual fund is traditionally
accomplished by either joining an existing
series trust offered by a larger custodian bank/administrator
or by creating a standalone fund.
Existing series trust: Creating a fund under
the umbrella of an existing series trust could take
approximately four to six months and the upfront
costs are comparable to setting up a traditional
hedge fund structure in the US. Ongoing annual
operating expenses of the mutual fund may include
fund administration, annual audit, shareholder
reporting and support, transfer agent, corporate
governance and compliance. The key benefits of
joining an existing series trust are shared costs among the
series trust participants, along with the distribution channels
that the platforms maintain, often with hundreds of
broker/dealer platforms or broker channels throughout
the US.
Standalone fund: Creating a standalone fund, especially
for a hedge fund sponsor that has never set up a mutual fund
before, could take six to 12 months and cost twice as much
as joining an existing series trust. Ongoing annual operating
expenses of the mutual fund may include fund administration,
annual audit, shareholder reporting and support, transfer
agent, corporate governance and compliance. The hedge
fund sponsor would not have the benefit of cost savings or
distribution agreements that are available to existing series
trust participants. The sponsor would then be tasked with
creating new relationships with broker/dealer platforms
and/or brokerage channels on their own.
Benefits to investors include the ability to diversify their
asset allocation into alternative investment strategies,
access to top investment talent, lower minimum investments
and daily liquidity.
ALTERNATIVE UCITS
As of March 2012, there were approximately
850 single manager alternative Ucits funds,
managing approximately $158bn. The Ucits
Directive is a set of European Union (EU) directives
that aim to allow collective investment
strategies to conceptually operate throughout
the EU and be authorised from one member
state and its regulatory body.
Launching an alternative Ucits fund is traditionally
accomplished by either joining an
existing Ucits Platform or by creating a standalone
fund.
Ucits platform: Creating a Ucits under the
umbrella of an existing series trust could take
approximately six to nine months and the costs
are comparable to setting up a traditional onshore/offshore
hedge fund structure in the US/
Cayman. Ongoing annual operating expenses of
the Ucits may include fund administration, annual
audit, shareholder reporting and support,
transfer agent, corporate governance and compliance.
The key benefits of joining an existing
WE CONTINUE TO
CONSULT OUR CLIENTS
ON BROADENING THEIR
PRODUCT LINES BEYOND
THE TRADITIONAL HEDGE
FUND STRUCTURES
”
Ucits platform are the shared costs among all Ucits
products along with the distribution channels that
the platforms maintain, often with hundreds of brokerages
throughout Europe.
Standalone fund: Creating a standalone fund,
especially for a hedge fund sponsor that has never
set up an alternative Ucits, could take six to 12
months and cost twice as much as joining an existing
Ucits Platform. Ongoing annual operating
expenses of the Ucits may include fund administration,
annual audit, shareholder reporting and
support, transfer agent, corporate governance and
compliance. The hedge fund sponsor would then
be tasked with creating new relationships with
broker/dealer platforms and/or brokerage channels
on their own.
The benefit to investors and their advisors for incorporating
alternative mutual fund and alternative Ucits products
include the ability to diversify their asset allocation
into alternative investment strategies, gain access to top
investment talent with lower minimum investments and
daily/weekly liquidity.
At Concept Capital we continue to consult our clients
on broadening their product lines beyond the traditional
hedge fund structures and separately managed accounts.
The benefits outlined above to both investors and fund
sponsors continue to drive the demand for product evolution.
We believe that the fund sponsors who take advantage
of this evolution, along with a developed marketing plan,
will benefit a great deal from the increased appetite from
affluent retail investors who wish to invest in alternatives.
DISCLAIMER
Concept Capital Markets, LLC is a registered broker
dealer and registered investment advisor with the Securities
and Exchange Commission (SEC), a member of the
Financial Industry Regulatory Authority (Finra), and a
member of the National Futures Association (NFA). n
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