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New platform will enable IFAs to create Sicavs, says KMG
Company expects asset managers and IFAs who set up funds to run them as FoFs or outsource management
Asset managers and IFAs now have the ability to create their own Sicav funds thanks to a new platform set up by KMG Sicav Sif.
The Luxembourg-based group launched the platform earlier this summer to give wealth managers, financial advisers and fund managers more control over their investments.
The platform can cater to all asset classes, including hedge funds, private equity and property, and there are no restrictions on leverage. KMG said it expected IFAs who do set up new funds to run them as funds of funds or to outsource their management to discretionary managers.
In recent months, a number of IFA firms such as Bestinvest, Tenet and Openwork have launched their own fund ranges, while more are understood to be considering the idea.
According to Kevin Mudd, a director at KMG, IFAs using the new platform will have a faster route to market, while also keeping down costs.
"A lot of fund managers are looking to move out of places like Guernsey or have decided, as times are tough, that they need to rationalise the business, and the platform is the perfect way to do that," he said.
"The main thing with the platform is that it simplifies life for IFAs. They can make an instant decision for their clients. In the UK, very few advisers are regulated to distribute their own funds, and while they are giving very good investment advice, they are only halfway there."
Mr Mudd said the process of setting up a new fund was relatively quick because the group is licensed and regulated in Luxembourg. The funds can be a very good choice for small companies and pre-IPOs, he added, as they can be started on a very small scale and raise capital quickly.
Under Sicav-Sif regulations, clients must invest at least €125,000 (£99,360) in these funds, or the investor must be certified as having understood the risks of the fund. KMG meets with all potential investors and looks at their track record. It also ensures the funds meet Luxembourg regulations and their objectives and risk profiles.
To set up a fund costs a minimum of €35,000, spread over five years in annual charges of each fund.
If an IFA wishes, KMG can take care of the whole process, or the main management can be left to the adviser while KMG handles administrative duties and the promotion and distribution of the fund.
