Alternative Investment Funds

Alternative Investment Funds (AIFs) are funds investing in any assets other than transferable securities.  This includes hedge funds, private equity, real estate and venture capital funds.

 

Prior to 2013, most AIFs were self-managed.  Investment decisions were made by the board or the employers of the fund, with external advice sought from an investment advisor.

The EU AIFM directive introduced stricter requirements on management services, and lead to the introduction of the regulated AIF Management Company, (“AIFM” or “Manco”).

Under the new laws, alternative investment vehicles fall into three categories:

  • Unregulated investment vehicles
  • Exempt AIFs
  • AIFs managed by a regulated AIFM

While large fund groups have set up in-house management companies, the cost is prohibitive for small fund promoters. The preferred option in this case is to outsource the management services to a authorised Manco.

JTC is able to advise fund promoters on the options available:

  • Structuring of unregulated investment vehicles and AIFs
  • Registration with the regulator of exempt AIFs (small funds and certain closed-ended funds)
  • Introduction of applications to the regulator for management of regulated AIFs

 

JTC Group’s Management Company Services

For funds requiring a regulated Manco, JTC can assist in all aspects, either setting up a dedicated Manco for larger funds groups or providing the services of a shared Manco.

The shared Manco provides considerable economies of scale.  It acts as a one-stop service provider for all Manco services including:

  • Risk management and related regulatory reporting
  • Portfolio management
  • Portfolio valuation
  • Support functions: accounting, internal audit

 

Portfolio Management

The Manco may act as portfolio manager under three models:

  • Delegating all portfolio management functions to the fund promoter, subject to suitable authorisation of the fund promoter.
  • Managing the portfolio under advice from the fund promoter’s adviser.
  • Full management on the portfolio.

 

Risk Management

The Manco can provide full risk management services, or may delegate some or all of this work to the fund promoter, according to the needs of the promoter

 

Portfolio Valuation

The Manco may act as valuation agent for AIFs, or may delegate this function to specialist companies, or the promoter, according to the asset class.