Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

FUND DISTRIBUTION MODELS & PLAYERS

F und management company The fund management company is the financial institution that launches the fund, determines the investment strategy, appoints the service providers, and makes all major decisions for and on behalf of the fund. It is responsible for the fund distribution and marketing. C ommission calculation agent The commission calculation agent is responsible for the calculation and payment of commis- sions to distributors. This role is generally held by the fund management company or can be held by an entity appointed for that purpose (e.g. transfer agent). I nvestment manager The investment manager executes the investment strategy, selects the securities of the portfo- lio in accordance with the fund objectives, as reflected in the fund prospectus. He or she places buy and sell orders for securities and other financial products in accordance with the fund’s net inflows and outflows resulting from subscription and redemption orders. D istributor The distributor promotes the sale of units/shares issued by funds of one or more fund manage- ment companies to his or her clients and acts as the clients’ agent in the order input/placement process. The distributor can provide fund information to potential investors and implement or- der transfer as well as flow of information between the fund and the investors. Distributors can be remunerated through entry fees and trailer fees. There are several different types of distributor, such as retail banks, private banks, insurance companies, independent financial advisors, fund supermarkets, funds of funds, corporates and institutions. A ggregator An aggregator is either a neutral infrastructure provider such as FundSettle, Vestima+ and AllFunds, which receives orders from multiple distributors/intermediaries and transmits them to the relevant transfer agent/registrar, or a distributor/intermediary that collects orders from multiple clients and places them with the relevant transfer agent/registrar. C ustodian /D epositary banks The custodian/depository bank safeguards the assets of the fund. The depository therefore has a supervisory mission, which requires it to be able to monitor how the assets of the fund have been invested and where there are invested and how they can be accessed. ICSD (I nternational C entral S ecurity D epository ) An ICSD is an entity which holds securities and other assets in order that cross-border trans- actions may be executed for beneficial owners and settled by way of entries on its own books (e.g.: Clearstream, Euroclear Bank). L ocal A gent Some countries of distribution such as Austria, Germany, Italy, Singapore and Switzerland require the fund management company to appoint a local representative and/or local pay- ing agent. Depending on the country, the role may simply involve transmission of information to investors, or may cover more complex duties including centralising subscriptions and redemptions, the payment of investment income, and even the payment of the supervisory authority’s fees.

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