Universal Master Funds plc (UMF), a Gibraltar-regulated fund company with an umbrella structure has just been launched. It 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.
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:
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.
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.
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.
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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