Kelly Anckenmann (Fuchs Asset Management): The Independence of a Third-Party Management Company/AIFM versus a One-Stop-Shop Solution
“Independent third-party ManCo/AIFMs can offer independence; can operate as a "central point of contact," and are the link between the client and any other service providers contracting with the fund.” says Kelly Anckenmann, Executive Director – Business Development & Marketing of Fuchs Asset Management. Interview.
Most players in the market claim to be one-stop shops. How do you define this?
The term “one-stop-shop" describes a service provider claiming to offer all relevant services under one roof. Today all large fund players in Luxembourg sell themselves as a “one-stop-shop” service provider. They offer company management, central administration, depositary, and transfer agency services within the same group promising faster project coordination and shorter time-to-market for their clients. This model is often appreciated by clients because they believe that having all services available from the same provider will offer them smooth onboarding and facilitate internal communication.
“At Fuchs Asset Management we are adopting a reverse strategy in the independent ManCo/AIFM third-party landscape in Luxembourg”
What are the advantages of an independent third-party ManCo/AIFM for clients?
First, for the sake of independence even if having a Manco/AIFM being part of the same group the functional and governance framework is separated internally. Secondly to avoid any potential conflicts of interest, it is always better to appoint a fully independent third-party management company/AIFM. It is interesting to recall that the role of a ManCo/AIFM is precisely to require compliance with the provisions of the AIFM law to ensure investor protection and the stability of the financial system. Therefore, a ManCo/AIFM cannot permanently comply with all legal, regulatory, and contractual provisions in full independence if it is within the same group. They say you should never put all your eggs in the same basket!
Clients often opt for the so-called "one-stop-shop" within the same group to facilitate communication and have a single point of contact. Unfortunately, this does not always reflect reality. What is critical for clients is teaming up with the right fund partners in Luxembourg and transforming their ambitions into concrete fund operations. The Alternative Investment Fund Management Directive (AIFMD) means more than just regulatory compliance. Clients are increasingly seeking to outsource administrative obligations to third-party ManCos/AIFMs, to allow them to concentrate on adding value for their investors. Independent third-party ManCo/AIFMs can offer independence; can operate as a "central point of contact," and are the link between the client and any other service providers contracting with the fund.
Do you think this model is sustainable in an industry that is constantly consolidating under cost and regulatory pressure?
The world of investment funds is becoming increasingly complex with new regulatory constraints that require more and more rigor and qualified employees. In a context where the pace of consolidation and market harmonization is accelerating, it is becoming difficult to remain independent. In the last two years, we have seen many third-party ManCo/AIFMs being acquired by large groups.
While market players tend to be more and more standardized and globalized, we proudly proclaim our tailor-made and boutique approach and hope to remain independent for as long as possible. At Fuchs Asset Management we are adopting a reverse strategy in the independent ManCo/AIFM third-party landscape in Luxembourg: We are offering real independence to ensure investor protection and the stability of the financial system as outlined in the AIFMD law.