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How can investment managers reach institutional investors in new jurisdictions – and offer tax-efficiency?

, Kevin Duggan

, Aaron Overy

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How can investment managers reach institutional investors in new jurisdictions – and offer tax-efficiency?

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Offering funds to institutional investors in new markets has always been a costly and time-consuming challenge for investment managers. Keeping up with tax regulations in different jurisdictions is a big part of that, often alongside the need to open a local entity and create a locally regulated product. However, Irish-domiciled Common Contractual Funds (CCFs) offer investment managers the opportunity to widen their investor pool without the regulatory and administrative headaches.

 

As we have discussed before, CCFs offer investors and investment managers several advantages over traditional pooled funds. For investment managers, particularly those looking to attract tax exempt investors, such as pension funds, from multiple jurisdictions, the key benefit is dividend withholding tax transparency. Beneficial investors in a fund can be identified on a look-through basis which means the correct tax treatment of their holdings can be applied.

 

As a result, investment managers can now rapidly increase fund distribution by offering it through a platform such as AMX. Our team actively engages with the process of helping open up new markets for the investment manager by seeking rulings from relevant tax authorities where there is potentially a compelling opportunity. The advantages of being able to apply the correct withholding tax (oftentimes zero in the case of pension funds and Sovereign Wealth Funds) is one of the reasons that Metropolis Capital decided to launch a CCF on the AMX platform

 

While sustainability is at the heart of Metropolis Capital’s investment philosophy and process, they also want to provide superior returns. Avoiding an unnecessary tax drag on their investment portfolio makes that a bit easier, as does our competitive fees and the efficiencies of running a larger pooled fund. At the same time, using the platform helped them increase their distribution capabilities.

 

Opening new markets to managers

AMX has the ability to market several of its alternative investment funds (CCFs) to institutional investors in South Africa as approved by the Financial Sector Conduct Authority (FSCA). Several AMX funds have been registered in four Canadian provinces and can facilitate tax transparent outcomes and entitlements for qualifying Canadian investors.

 

We are now working with tax authorities in various Nordic countries on getting the necessary clearance for a number of Irish-domiciled CCFs. This follows demand from institutional investors in Finland, Denmark, Iceland, and Sweden who are looking for opportunities to invest in a more tax efficient fund than currently available in their home domicile and by managers who also want to sell to investors in the UK and the Netherlands. 

 

To find out more about how CCFs can benefit you, get in touch with us.

 

 

Photo by Febiyan on Unsplash


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