Investment Vehicles Disrupting the Global Asset Management Industry

The last decades have witnessed a dramatic shift in the global asset management industry. In terms of distribution, numerous and growing investment vehicle alternatives are available for alternative asset and portfolio managers. From traditional Luxembourg and Caribbean investment fund structures to actively managed Swiss certificates (commonly referred to as AMCs), UCITS, or structured notes, the choices to repack and distribute a given investment strategy can be almost countless.

Asset Securitization and Exchange – Traded Products (ETPs) as Efficient Investment Vehicles

Modern asset securitization or repackaging strategies have become a bridge to reach multiple private banking channels for various types of assets, facilitating the process of converting the underlying assets into bankable assets. Bankable assets are a type of asset characterized by being distributable across different platforms in private banking.

Securitization is a process that not only allows any portfolio of liquid or illiquid assets, such as real estate, to be converted into listed securities. It also leverages the capacity of the exchange-traded product (ETP) to transform the underlying assets into bankable assets.

However, how such assets convert into bankable assets through an ETP is a complex process made possible by firms like FlexFunds, a leading investment vehicle structuring, and administration services provider.

FlexFunds Disrupting the Industry’s Status Quo

FlexFunds partners with global asset managers to provide administration services for exchange-traded products (ETPs) and corporate business services. The company sets up independent investment vehicles similar to funds for strategy management and global distribution to non-U.S. end-investors. It is achieved through an asset securitization program that creates ETPs, what the company calls a Flex, and includes services such as exchange listing, fund accounting, back-office services, and Net Asset Value (NAV) calculation.

With investor demand becoming increasingly complex and companies facing squeezed margins, asset management firms must make significant changes to their strategies and business models to succeed in today’s fluid and challenging environment.

“Not long ago, only a few large banks had the ability to structure a global note through an asset securitization program,” says Emilio Veiga Gil, EVP, and CMO of FlexFunds. “We have disrupted the status quo by democratizing access to efficient investment vehicles.” Today, asset managers, investment advisors, portfolio managers, hedge funds, broker-dealers, and family offices can collaborate with FlexFunds to structure ETF-like investment vehicles and raise capital internationally.

FlexFunds mitigates the most common challenges its clients face across various segments and geographies. On the cost side, the company sets up an investment vehicle for less than half the cost of alternatives in the market. For instance, clients can save up to 60 percent of ongoing maintenance costs with FlexFunds ETPs over traditional investment funds, such as Caribbean and Luxembourg.

While structuring investment funds can be a tedious and lengthy process, taking more than six months to make it to market, companies can set up and launch FlexFunds ETPs in six to eight weeks. In addition, its ETPs are flexible, as multiple types of assets (listed and alternative investments) can be securitized under customized terms.

FlexFunds provides turnkey and custom-built solutions that simplify the setup and launching of ETPs, fund accounting, and corporate administration services for its customers. Offerings can address current and future market requirements to support growth plans with regulated or unregulated programs and white-label capabilities.

An Investment Vehicle with Multiple Applications and Advantages

FlexFunds ETPs have multiple applications due to their versatility:

• For portfolio managers: it provides centralized managed account advantages.
• In the case of funds managers (hedge funds, private equity, venture capital): it eases access to global capital markets.
• Alternative Asset and Real Estate Managers: ease of capital raising and flexibility in underlying assets.
• Industrial Corporations: access to global debt investors.
• Family Offices: ensure asset confidentiality & transferability.

FlexFunds ETPs stand out from traditional funds or other alternative investment vehicles due to a series of essential features:

• Speed & Efficiency: issuance launched within 6 to 8 weeks.
• Compliance Coverage: KYC/AML requirements are covered by investors’ existing brokerage accounts, maintaining investor confidentiality.
• Global access to capital markets.
• Flexible Use: multiple types of assets can be securitized under customized terms.
• Integrated Administration: services are provided by the most trusted financial and legal institutions worldwide.
• Direct Reporting: the price is calculated and distributed directly to Bloomberg, the exchange, and investors’ accounts

“Thanks to FlexFunds’ solutions, you can access investment vehicles that securitize multiple asset classes, liquid and alternative,” says Jose Carlos Gonzalez-Navarro, CEO of FlexFunds. “Our differential is the coordination of a securitization program quickly and efficiently, taking care of all phases of the process from end to end, providing a turnkey solution for our clients.”

Some Solutions in Action

FlexFunds’ portfolio of services and solutions has been instrumental in helping several international investors and global asset managers attain the desired level of outcomes. LifeInvest, a regulated asset manager with over 25 years of experience and more than 200 clients in Latin America, issued three ETPs with FlexFunds. Its offerings provided LifeInvest with agile and efficient tools to distribute its investment strategies in international private banking channels. LifeInvest created a centralized management structure with global custody for half the cost of their traditional funds. As a result, the client’s investors could access products from their brokerage accounts and reach new investors without burdening their team.

In the alternative asset world, FlexFunds helped Participant Capital, the equity arm of a leading Florida-based real estate and development firm, Royal Palm Companies, established in the 1970s. Its portfolio has generated more than 6,000 units across mixed-use developments, multi-family residences, and hospitality, with managed and completed project assets totaling more than $3.5 billion. In the case of Participant Capital, FlexFunds ETPs were an important investment vehicle utilized to access its international investor base. This solution allowed Participant Capital to expand its distribution capacity to various financial institutions, private banking, and broker-dealers.

With more than $1.5 billion under administration and more than 200 clients in America, Asia, and Europe is a success story that propelled FlexFunds to be a world reference in the setup and administration of customized investment vehicles. Substantiating the company’s rapid growth is its team of experts in financial services with a total of more than 30 years of international experience. They are committed to providing high-quality, client-centered services backed by internationally-renowned institutions such as Bank of New York Mellon, Apex, Intertrust Trustees, and Bloomberg, among others.