Universal Master Funds plc (UMF), a Gibraltar-regulated fund company with an umbrella structure has just been launched. UMF has been developed as a special-purpose vehicle to facilitate the setting up and operation of an unlimited number of 'sub-funds' under the umbrella structure for different promoters.
"This is only the first cog in the wheel,"
said Christopher Labrow, Chairman of the Gibraltar
Association of Stockbrokers and Investment Managers
(GASIM) and the man behind the innovative new vehicle.
"I have also set up IFAS (Gibraltar) Ltd, a third-party
fund administration company which can offer consulting
and fund administration, either for funds which are
to be set up in Gibraltar, or set up elsewhere to
be administered from here."
UMF and its underlying funds are administered by IFAS
(Independent Fund Administration Services), and Universal
Master Funds operates under a main general prospectus
with each underlying fund having its own abbreviated
prospectus that is specific to that fund. Each fund
promoter may appoint its chosen investment adviser
and the fund may be identified, where required, as
that promoter's fund. The custodian services to UMF
are provided by ABN Amro Bank NV Gibraltar branch,
but promoters may use a different custodian for their
own fund(s) if they so wish.
"UMF is already formed and licensed and this
means that the work involved in the setting up of
each new fund is substantially reduced," Chris
Labrow further commented. "This alleviates both
the cost and the time taken to start a fund."
In fact Labrow revealed that a major offshore life
company has already chosen UMF as a vehicle for two
of their funds.
Regulatory approval
Each fund (or sub-fund of UMF) must of course be submitted
to the Gibraltar Financial Services Commission (FSC)
for approval. However, this approval will centre only
on the details of the specific fund itself rather
than a new overall structure, and will include an
appraisal of the fund investment strategy, the fund
investment advisers and details of the promoter. UMF
is licensed under the provisions of Section 6 of the
Financial Services Ordinance 1989 (Authorisation of
a Collective Investment Scheme).
Chris Labrow is passionate about the opportunities
that exist in funds and fund administration. "My
objective is to be instrumental in attracting funds
business to Gibraltar," he enthused. ""In
other jurisdictions they are overwhelmed with business
but cannot cope. Jersey, for instance, would no doubt
be more than willing to outsource fund administration
work to Gibraltar. We have the ability to bring staff
in which is a huge selling point."
Types of fund
UMF is able to accept a wide range of fund types and
investment strategies. Any limits in terms of minimum
size are governed by a modest basic fee rather than
an absolute value. However, UMF is not suitable as
a vehicle for highly-geared or derivative-based funds.
IFAS is able to offer a different facility for these
types of funds and its professional staff are experienced
in operating schemes of this nature.
Separation of assets
Each fund is operated completely separately, as provided
for in the UMF documentation. However, to ensure that
in exceptional circumstances there will be no liability
extending from one fund to another, the Board of UMF
in its monitoring capacity will not accept types of
funds that can prejudice the independent status of
each fund, such as those that can operate or fall
into a deficit situation.
UMF also has the following features:
Flexibility
Funds can be established for a wide variety of purposes
and types of investor. The UMF structure can, for
example, be an effective way for portfolio managers
to reduce administration and establish economies of
scale by grouping together certain of their clients
in cases where the same investment strategy can be
applied.
Tax savings
Depending upon the tax jurisdiction of the investor,
or the promoter, the use of funds based in Gibraltar
can very often alleviate or remove liabilities to
taxes that would otherwise be applied to individual
clients of a portfolio manager. Examples include the
removal of stamp duty on trading for Swiss investors
and the reduction, or deferral, or capital gains tax
for UK investors.
Anonymity
This can cover many situations, for instance there
may be market sensitivity over the purchase of shares
in small or unlisted companies by well-known investors.
A fund within UMF may well resolve such problems.
Customised approach
The administrators of UMF funds, IFAS (Gibraltar)
Ltd are able to provide a customised approach to each
fund promoter's requirements, including frequency
of valuations, methods and style of reporting, choice
of custodian, liaison with investment advisers, brokers,
etc.
Suitability for insurance products
UMF funds can be established specifically to be used
in conjunction with one or more life offices' investment
products, such as personal portfolio bonds, allowing
funds to be branded for intermediaries and other promoters.
This is a logical development and improvement upon
'broker bond funds'.
Chris Labrow was keen to make mention of the considerable
help he had received from legal advisers Hassans,
and in particular Nigel Feetham. "They were very
supportive in the structuring of UMF," he said,
"and are also very keen to see the development
of the fund industry in Gibraltar."
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