www.fortis.lu

Prime Fund Solutions Luxembourg — services that put you ahead

1. Challenges facing our industry

You would probably say:

“investors are fed up with advisers at the corner of their street pitching conservative investments, the traditional 70%/30% bond/equity mix”

or

“investors are more likely to take risks today because they trust supranational legislators and local regulators to make rules that effectively control these risks while still generating alpha”

I am tempted to say also “yes” in both cases.

There can be no question that investors today are becoming more and more financially literate. They tend to better understand which products best suit their needs. On the whole, they are

• less risk-averse
• more inclined to seek higher returns on their investments.

Which is probably why the fund service industry is witnessing the convergence of the two worlds:

• traditional asset managers handling mainly long-only funds
• alternative managers investing in more volatile instruments and generating higher returns.

In recent years, we have seen several long-only fund managers buy up alternative asset managers. They also created specialist teams to handle these more complex strategies.
Increasingly, multi-talented investment managers offer their target audiences a full choice of investment strategies (from blue chips to over-the-counter Asian derivatives), whether through fully dedicated vehicles or dedicated sub-funds within the same legal entity.

2. Luxembourg's potential as a hub for alternative investments

Luxembourg has a long-standing reputation as a jurisdiction for all types of alternative investment funds, mostly in the regulated sector:

• UCITS
• highly-regulated, long-only funds
• custody
• banking and administration services.

A question that obviously needs to be answered first concerns the definition of an alternative fund. As I see it, an alternative fund is an investment entity that targets absolute returns uncorrelated to the performance of financial markets.

This is the case for

• hedge funds
• private equity funds
• real estate funds
• funds of such funds.

The main difference between Luxembourg and other offshore jurisdictions is that alternative funds are qualified as regulated investments. This means that they are subject to the prudential control of a regulated supervisory body. Their assets are held and supervised by an independent custodian bank acting on behalf of the investors and protecting their interests.

3. Fortis Prime Fund Solutions

Anticipating the changing needs of the alternative and traditional fund management industry, Fortis has brought all fund services together through Prime Fund Solutions, enabling it to offer an outstandingly broad range of capabilities in fund administration, custody, clearing, banking and financing. Over recent years, these capabilities have been backed with major investments to expand global operations and create new value, with our clients now reaping the full benefits.

At Fortis in Luxembourg, we are convinced that we must be able to deliver core custody and fund administration services to:

• long-only funds
• hedge funds
• fund of hedge funds
• private equity
• real estate funds.

We round these out with securities lending/borrowing, leverage/bridge financing, execution and other value-added services, in keeping with our mission of providing the full chain of services for all types of investment structure.

4. A wealth of experience and outstanding expertise

A recognized provider for alternative funds, Fortis Prime Fund Solutions has been servicing hedge funds and fund of hedge funds since the 1970s. Today it is the world's largest service provider for funds of hedge funds, with assets exceeding $260 billion, mostly represented by unregulated funds domiciled in the Caribbean.

Prime Fund Solutions administers funds from Luxembourg and five leading offshore locations:

• the Cayman Islands
• Curacao
• Hong Kong
• Ireland
• the Isle of Man.

It also has representative sales offices in Amsterdam, the British Virgin Islands, Frankfurt, Geneva, London, Madrid, Milan, New York, San Francisco, Singapore and Tokyo.

Drawing strength from almost 40 years of experience, Prime Fund Solutions Luxembourg has consistently played a pioneering role in services for new fund structures:

• the first Luxembourg regulated fund of hedge funds called on Prime Fund Solutions in 1991
• its clients have included regulated private equity and real estate funds since 1992 and 1989, respectively
• partner of one of the first SICAR venture capital funds in 2004
• among the first providers for the Specialised Investment Funds (SIF) targeting sophisticated investors that were introduced under new legislation in February 2007.

The changes to Luxembourg law make for greater flexibility in fund structure and extend the concept of eligible investors. The legislation is highly favourable for asset gatherers and attracts investment fund initiators and managers that do not qualify as promoters or managers as defined in Luxembourg regulations.

Combining the safety of a regulated entity with a high degree of investment flexibility, Specialised Investment Funds offer broad scope for legal structuring and are subject to only minimum reporting requirements. They are, however, supervised by the CSSF, Luxembourg's financial watchdog, and are thus open to individual investors.

5. Strength from three important partnerships

Advent Geneva, global clients operating hedge funds and funds of hedge funds benefit from a revolutionary accounting platform together with equalisation and transfer agency tools that set the standard for the industry. Technology allows operations spanning centres in the three main time zones (Asia, Europe and the US) with flexible and efficient procedures.

Fastnet, a European leader in fund administration services that has a deserved reputation for dedication to excellence, and is a major contributor to our company's business in Luxembourg and Belgium.

Fortis Intertrust Luxembourg: a specialised trust and corporate services provider with an outstanding track record.

6. Effective support for distribution and trading: FME

Luxembourg is the world’s leading hub for global fund distribution. In this area Prime Fund Solutions offers special appeal with a unique fund brokerage platform, its Fund Market Engine (FME).

Designed for third-party fund brokerage and custody, it currently serves over 140 top promoters offering some 16,000 funds (at share class level) to Fortis group entities and third-party institutional clients such as fund of fund promoters and private banks. Fully automated subscription and redemption of fund shares reduces transaction costs and FME manages collection and disbursement of trailer fees.

To learn more about products and services of Prime Fund Solutions in Luxembourg,

please contact Luc Leleux

Tel: +352 42 42-68 62
Email: luc.leleux@fortis.lu
Web: www.fortis.lu

 

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