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TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-05-29 14:59
I have read all the threads on UCITS on NP and it seems:

a) it wasn't a big topic back then
b) you guys stopped talking about it around 2010...

It's 10 years later and some things have changed in UCITS (and non-UCITS) world...

I have self-primed myself on the matter reading various papers from various consultants offering to set up UCITS, but obviously I am going to need to talk to one to evaluate what to do...

I'd love to know if someone here would recommend a good consultant to set up a UCITS (and/or a non-UCITS) in Ireland or Malta.

Let's say I am confused... I want to understand if a certain strategy run with options spreads can be accepted within one frame or the other... and let's say I am a registered CTA in the US, but I live in Europe now... and I may even have a Cayman IM ready to use (I do in fact), so it's a bit of a mess, I have to tie up a bunch of loose ends because I am in a "new setup" phase.

I need to understand a number of things, so I was wondering if you guys know someone that would be willing to spend a bit of their time to market their UCITS setup services to me and (cough cough) explain me what I want to know....

Or if any of you is happy to waste his time answering to me here, that would be even more awesome Cool


quantie


Total Posts: 897
Joined: Jun 2004
 
Posted: 2020-06-06 02:49
Start with a call to these guys https://www.montlakefunds.com

It's an expensive wrapper..

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-16 07:18
Thank you

HitmanH


Total Posts: 497
Joined: Apr 2005
 
Posted: 2020-06-16 13:58
UCITS can be an expensive wrapper - but in all fairness - MontLake are one of cheaper options out there.

KBA are typically considered the best in the market, but they come with a price - there is also Carne and DMS too. MontLake has some good people - so I'd stick with them.

Option spread strategies can fit in the structure - but you have to take time to educate the risk people - and some platforms may not want something that doesn't fit into a narrow structure.

There's not much point in having a Cayman IM - that won't cut it. They will have the primary IM as the platform - say in Ireland - and then delegate some things to you. SEC/CFTC(/NRA)/FCA etc is really what they;re looking for. MontLake can also put you under their FCA entitiy in UK

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-16 17:39
Thank you Hitman.

goldorak


Total Posts: 1091
Joined: Nov 2004
 
Posted: 2020-06-20 18:37
May be have a look at imaps capital in Liechtenstein. They pretend to wrap KY fund in exchange traded products.

Just saw a marketing doc some time ago and I do not know them. No endorsement here.


If you are not living on the edge you are taking up too much space.

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-20 19:40
I never launched a UCITS in my life, but I did get some quotes at some point a few years ago. The actual wrapper came out a lot cheaper than I expected, and a lot cheaper than any ky structure - it was like GBP 50k or so, from a big law firm.

Ongoing compliance for UCITS is where the costs come in, but I don't have any first hand experience of that.

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-22 06:54
Thank you Goldorak and Ronin.

how about UCTIS umbrellas sub-funds? unless I am mistaken I remember years ago I had seen Maltese structures at around 20k/year cost?

not sure if that is matched by a similar price in Ireland...

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-22 08:54
I'll try to dig up that quote. If I remember correctly, it was 40k to launch the UK umbrella UCITS, then 10k to launch any new sub.

I don't remember the ongoing costs, but I'll post it if I find it.

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-23 07:30
This may be going a bit off topic but the ETI wrapper described in the link suggested by Goldorak is an interesting object.

Has anyone had any experience with those kind of wrappers?

In case it is not clear I am looking for various possible ways to bring a certain investment product to a broad array of investors, so both UCITS or exchange-traded funds may work, in theory, subject to verification...

HitmanH


Total Posts: 497
Joined: Apr 2005
 
Posted: 2020-06-23 14:34
Malta is a nightmare though - Lux or Ireland if you want to sell

HitmanH


Total Posts: 497
Joined: Apr 2005
 
Posted: 2020-06-23 16:04
We have looked at them - works for one off distributions we've found - not continuous open products as well

Also - i commented on MontLake and mentioned DMS - they announced a merger yesterday...

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-23 17:28
> Malta is a nightmare

Agreed!!

I still have to talk to MontLake, they are at the top of my list but I want to have everything sorted out on my end before I call them.

NIP247


Total Posts: 549
Joined: Feb 2005
 
Posted: 2020-06-23 18:16
Tswp, could I humbly suggest that you focus on one jurisdiction and then see where the demand comes from? If there’s demand for a UCITS format with a proper letter of intent to invest, setting up the wrapper structure should be easy. I’d rather go that route than offering all kind of wrappers hoping that investors may come ( and obviously, if your interest in UCITS is on back of a serious investor demand, you can disregard my comment )

On your straddle, done on the puts, working the calls...

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-24 07:22
NIP247,
your suggestion is very appreciated.

My problem is that I have prospects on both sides of the Atlantic, and after a failed US launch (=we did not launch) in 2019 with a standard CPO/CTA, I am under the impression that starting up a fund for qualified and institutions is going to be much harder vs. a UCITS or other open-to-all investors type of wrapper.

I think this was also discussed years ago in a thread here where some people said they were looking into UCITS to expand the possible base of investors, finding it harder and harder to attract qualified investors and the like.

My impression is that the industry in the last few years have verticalized itself: a few guys at the top have all the clients, a few guys below have the crumbles, and below that there is nothing: desert, no man's land... it's like a cloud above everything else with all the investors in and you cannot access that cloud...

Nobody is going to invest their money in startup funds from non-pedigree people (i.e. unless you come from already established firms, very large books, etc.).

Marketing a new fund to any type of investors via UCITS or ET-something may be a better path.

I may be wrong, but also looking at the recent absurd rise of the number of people trying to self-manage their money (usually with disastrous results), or the success of pathetic robot-advisors, if I had to look at the money management market from this perspective, I think in 2020 "hedge fund for the masses" as a startup may have more chances of success that "hedge fund for the few".

Feel free to bash me, whiplash me, insult me, call me an idiot, I am happy to hear all your comments and suggestions, I am always learning.

Thanks.

NIP247


Total Posts: 549
Joined: Feb 2005
 
Posted: 2020-06-24 11:11
I’m not trying to discourage you in any way. In my opinion, finding an anchor investor is the only way to go, and the wrapper will be whatever that anchor investor demands. Generally, you’ll find your anchor investor close to home where you have a network and a reputation. Contrary to what someone might have said in Market Wizards years ago, good performance doesn’t sell itself (anymore). From what I’ve seen, you need to make sure you have a decent amount of money to cover the fixed reg and compliance costs, and hope that you can survive the minimum of three years of live trading and nav publishing to be a contender for rankings and maybe then investment. In any case, these days I feel ( emphasis on *feel* and some other forum members will be better suited to give you more concrete evidence ), that investors are looking for specific “products” rather than unique managers or esoteric returns. In that world, you need to ask yourself if you have a management proposal looking for an investor or if you have identified an investor need and are offering a solution.

On your straddle, done on the puts, working the calls...

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-24 20:47
@tswp,

I don't think that will work the way you think. Starting from the simple point that UCITS isn't automatically passported - you have to actually deal with 27 different regulators. And pay them fees. And file stuff. And keep track of 27 different filing schedules. And translate stuff into who knows how many languages. Etc, etc.

If you just want one jurisdiction, there are usually better structures. Say you only distribute in the UK, you would almost certainly go for a non-UCITS retail fund.

And then, how do people actually buy your UCITS? You still need distribution, marketing etc etc. And that is orders of magnitude more complicated and more expensive in the retail world than in the professional world.

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-25 08:36
This is getting very interesting, thank you both for the input.

non-UCITS opens another door, was on my list but was not ready to discuss.

I think 3 major distribution jurisdictions like UK, US and Switzerland may be more than enough for starters, but I do understand there are challenges.

I had an anchor investor in my first attempt to launch a CTA operation but the level of polarization involved was unbearable, you end up putting up with whatever they want from you and this can lead to the end of the business if they make wrong decisions and impose them onto you. I try to avoid that path unless I deal with someone that has been in the business and has been successful, then it's worth taking the risk.

Re: retail investors
I am not talking only about people with some savings, there are many small millionaires in the US that are retail investors, and they do not want to invest in a hedge fund, they want a ETF-like product, or something they can get in and out easy without too much fuzz or red tape. The same applies to several US "portfolio managers" or investment advisors. I know a few.

They want a good hedge-fund grade investment product, so they can have their money invested with a better risk-reward than mutual funds. And they want to be able to get in and out like you do with an ETF or a fund you buy from your online brokerage. Otherwise they are left with self-directed online trading and that ends with disaster.

I think there is a void to fill, and thus a market, for a product that can offer this service.

I may be wrong... and it may be hard or impossible to do.

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-25 10:52
I don't think you want to be thinking about the US and Europe at the same time. Regulations in the US are very idiosyncratic. The grand total number of products that are offered in the US and outside the US is, for all intents and purposes, zero.

Having said that, your definition is pretty much the definition of retail investors. It doesn't solve your problem. The only way you sell stuff to retail is by pushing it to them. Either get it on existing platforms, or build your own distribution.

As a business plan, is more silicone valley VC thing than a fund proposal. Maybe you get somewhere with that route, get some vcs to fund it and see where it goes.

The main practical problem with retail is that retail do what retail do. As long as you are making money, they are happy like clams. The moment you have a bad month they go
"Oh geez, we is just poor retail investors who never understoods what the big bad man solds us. We was missold.
No, well keep the profits up to now, thanks for those. But we want out at pre loss."

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-26 07:48
What you say is 100% true.

I do know some guys in Palo Alto, in fact I originally started up with the help of one of them, years ago.

I will have to think about this...

Maggette


Total Posts: 1233
Joined: Jun 2007
 
Posted: 2020-06-26 09:03
I do think there is a market for semi-rich ( by modern standards) people who are financially "literate".

Everybody can buy a simple "60%-40%" or "70%-30%" style portfolio consisting ETFs on a couple of stock indices and some bonds. Add some re-balancing to target weights to it (and that includes re-balancing into cash) and it is my humble opinion that you are quite alright on the "invest your savings" front.

I know quite a few people who act that way. Myself included. The richer ones add real estate to the mix.

Still, with capital they consider risk capital I think people like that would like to have an ETF based product that they could add to the mix , that either adds more risk and potential return or is uncorrelated to markets. I certainly would allocate part of my money to something that can make a real case to be market neutral.

But can you make a living from investors who want to bring 100K to 1mio max? How many of them do you have to push your stuff to? I would guess you would need a whole sales team to that.


Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-26 21:11
I think I may have access to thousands of them, mostly Americans, through some people in California that had done business with me in the past and runs some business that cater to a wide audience mostly populated by various type of retail investors and also investment advisors, some actually with large books (like 100M / 200M each).

I cannot say for sure this will work, I am just speculating and sharing my thoughts but let me say something:

most people on NP comes from a certain background and it is in touch mostly/exclusively with certain type of investors. So I understand the skepticism about the idea I presented here....

However the skepticism may be coming from the fact that scientists and quants don't waste their time dealing with retail people, and so the whole idea of marketing to them seems hard to do, because if you know zero about something, it's hard to imagine how could you even start to deal with it.

If you have zero friends, making friends seems a really hard thing to do... but if you already have a lot of friends, you may think making friends is easy.

I had a part of my career dealing (also, not only) with retail investors and I have developed a deep vantage point on this crowd, I know them well, I know what they want, what they think, how they act. Maybe that is why I appear positive on this marketing approach.

By the way what Ronin said is the key to success with them: you cannot lose money, they are not patient, returns have to be stellar... the paradox is that you need to be RenTec-good to be successful with retail investors, you need to be *that* good.

Whereas in some hedge funds, clients are happy with a 3% a year - if it is non-correlated to other streams.

So I do understand why managers do not want to deal with retails. Who wants that??

It's a huge challenge...

I appreciate all of your inputs, this is a very helpful discussion.

Thanks.







ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-29 10:55
I guess that answers your question. You have a ready made prospective client base in the US, and you also have a regulatory exemption there until you hit $150 million.

People have started with much less.

But you will need a US lawyer to advise on the structure - DIY won't fly.

"There is a SIX am?" -- Arthur

TSWP


Total Posts: 448
Joined: May 2012
 
Posted: 2020-06-30 07:30
Agreed.

There is one thing that concerns me and I doubt UCITS or ET-things can help with that: the speed of redemptions, i.e. the fact that investors can pull the money from the fund at will, with a click of a mouse, can hurt the strategies allocation planning (or make it a nightmare).

Does anyone know if these type of funds can have timed-redemptions, i.e. wait for 1 week or so before the investor can get the money back?

I think the answer is NO, but correct me if I am wrong...

If that is the case, unfortunately these wrappers won't work for me.

ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-06-30 11:24
Monthly liquidity is pretty standard. If you make it weekly, you will be super aggressive.

"There is a SIX am?" -- Arthur
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