The Natixis IM survey reveals that portfolio managers’ most significant concern continues to be the increasing inflation rate (70%), followed by a sustained rise in interest rate (63%). Despite this outlook, investment advisors remain optimistic.
According to the same source, asset funds, sustainable investments, and private assets are the focus of portfolio managers for the remainder of 2023.
In this regard, investment fund managers see potential opportunities in the rising interest rates that accompany inflation, making fixed-income instruments a significant player during 2023.
However, the returns offered by these instruments in some Latin American countries are favorable for attracting investors through offshore investment vehicles, helping to increase their distribution in international private banking.
Several alternatives in the market allow for securitizing a fixed-income investment strategy or any portfolio with diverse underlying assets. When making a choice, it is essential to consider the following aspects:
Cost: There are two main costs associated with an investment vehicle. The first is related to the structuring and launch of the investment vehicle, and the second refers to the expenses related to its daily maintenance. Both cost elements are crucial when selecting a suitable investment vehicle to avoid penalizing investors with high structural costs impacting their returns.
Trading Hours and Operations: Some European investment vehicles may not offer operational and tradable hours fully compatible with those in the Americas. This is particularly important when the investment strategy requires quick execution of subscription and redemption orders by the trading desk.
Distribution and Custody Capacity: One of the main criteria for selecting an investment vehicle should be its potential for future distribution. Nowadays, registering investment funds on certain private banking platforms can be a costly, lengthy, and tedious process.
Transparency and Disclosure: Ensuring the investment vehicle provides clear and detailed information about its investment strategy, underlying assets, and associated risks. Transparency and proper disclosure are fundamental for investors to make informed decisions.
Flexibility and Diversification Capability: It is especially important to consider whether the investment vehicle is flexible enough to package multiple asset classes. This will allow for portfolio diversification and the application of hedging and covered call strategies.
Launch Time: The timing and synchronization between the vehicle’s launch and capital raising is usually crucial for asset managers. It is not only about the structure having an agile “time to market” but also about coordinating inflows from investors promptly.
In this context, the following is a comparative analysis between the Active Management Certificate (AMC) and FlexFunds‘ FlexPortfolio, where you can learn about the advantages and disadvantages of each:
AMCs present themselves as a flexible alternative with the capacity to solve the scalability issue. Due to their nature as structured products, they may be more complex and may not share many of the advantages offered by ETPs (Exchange Traded Products).
On the other hand, the FlexPortfolio is an internationally recognized solution for asset managers seeking a quick and efficient structure to launch various investment strategies. It is an investment vehicle that allows for the securitization of multiple listed asset classes.
It transforms an investment strategy into a negotiable security listed on a stock exchange and distributable through Euroclear. This way, asset managers can significantly expand the distribution of their portfolios.
Among the main advantages offered by the FlexPortfolio are:
Flexibility:
The FlexPortfolio offers broad flexibility in the underlying assets that can be repackaged
Ease of distribution:
Investors can access the investment strategy you design directly from their own brokerage accounts. It is a simple securities purchase operation with an ISIN-CUSIP number.
The FlexPortfolio is a Eurocleable investment vehicle. Therefore, your investment strategy can be distributed globally.
Operational Capacity:
There is little or no restriction concerning rebalancing or trading the underlying FlexPortfolio’s account.
The manager can perform all trades directly in the brokerage account without the involvement of third parties.
FlexPortfolio allows direct access and trading of your brokerage account 24 hours a day, 7 days a week, regardless of the time zone.
Security of issuance:
The investment strategy is backed by the underlying assets and utterly independent of the promoter’s activities.
Possibility of leverage:
Leverage can be available for many strategies. At FlexFunds, through Interactive Brokers, we offer you the possibility to trade on margin.
Competitive Costs:
The FlexPortfolio can have no set-up or maintenance cost, making it a very cost-efficient investment vehicle.
Speed of launch:
The setup and launch of the FlexPortfolio usually take between 6 and 8 weeks. This can be less than half the time required by other alternatives in the market.
In summary, the selection of an investment vehicle will depend, among other factors, on the underlying assets you wish to repackage, the available time and cost, future distribution needs, and operational requirements.
The FlexPortfolio offers a simple, flexible, agile, and cost-efficient solution for asset managers. Consider our FlexPortfolio when evaluating an AMC or any other investment vehicle. You can contact FlexFunds through the following email address [email protected], and one of our representatives will contact you to assess the solution that best suits your needs and investment strategy.
Emilio Veiga Gil 
, Executive Vice President and Chief Marketing Officer for FlexFunds.
- diversification
- Fixed Income
- FlexFunds
- Securitization
