AFSA has registered Fonte Emerging Markets Umbrella Fund OEIC Limited as the first Umbrella Fund in AIFC, which represents an investment vehicle comprising several Sub-Funds, each with its unique investment objectives and strategies, while remaining as a single legal entity, DKnews.kz reports.
The sub-funds represent distinct investment portfolios within the main Fund, each with its own investment objectives, strategies, and assets. Thus, the Fund utilises internal mechanisms to segregate the assets and liabilities of the Sub-Funds.
Umbrella Funds are considered beneficial for investment firms for a number of reasons. One of them is being that it allows for economies of scale, as pooling the assets of multiple Sub-Funds together can lead to lower operating costs. This strategy is particularly advantageous for smaller investment firms, which might otherwise struggle with the financial and administrative burdens associated with managing multiple standalone Funds.
In addition to cost savings, an Umbrella Fund also offers flexibility in terms of the types of investment products that can be offered. Investment Managers and Advisors can create a variety of Sub-Funds that cater to different investment strategies and asset classes, allowing them to meet the needs of a wider range of clients. This can be particularly useful for firms that want to offer, for example, a range of socially responsible investment options, as they can create Sub-Funds focused on specific environmental, social, and governance (ESG) criteria.
Another advantage of an Umbrella Fund is that it allows for easier administration and management. Since all the Sub-Funds operate under a single legal and organisational structure, there is a unified set of rules and regulations to follow. This simplifies compliance with regulatory requirements for Investment Managers and Advisors, ensuring that all investment products are managed consistently. The streamlined administrative framework reduces the complexity and potential for errors, making the overall management process more efficient and effective.
“Regulations that enable new types of Fund structures mean more options for investors and consequently greater economic diversification. As our regulatory environment at AFSA continues to evolve, we come up with more advanced concepts providing better value for markets and consumers” Nurkhat Kushimov, AFSA Chief Executive Officer
