Published in: STOCK WORLD

Hedge funds, venture capital funds and private equity funds are among the most interesting investment products for institutional investors. Accessing them is not always easy, however, even for medium-sized institutional investors, and there are also regulatory obstacles. “This access can be simplified considerably”, said Daniel Knoblach, Board Member at FAIR ALPHA. “A number of securitisation structures are now about to be launched that will allow investors to participate specifically in these sought-after investment products.”

Particularly in times of low interest rates, which continue to dominate the investment sphere, the returns of hedge funds, venture capital funds, private equity funds or other closed-end funds represent an interesting alternative. Usually, the asset class is subject to strict restrictions, such as minimum investments, or it is characterised by complicated investment processes. “This is why many small and medium-sized institutional investors have almost no chance of accessing these investments”, Knoblach pointed out. “A Luxembourg compartment combined with a professional investment manager, on the other hand, allows access to these investments and to obtain securities that are eligible for custody and clearing. This is not always a given in the world of funds.“

This approach ensures that experienced experts assume and monitor the selection and composition of the target products. “A dedicated investment manager selects the optimal allocation of AIFs with different risk-return profiles”, said Knoblach. As several target funds can be bundled in the portfolio, the risk is more widely spread than with investments in individual AIFs.

The structure as securitisation under Luxembourg law offers several advantages according to Knoblach: “While many attractive target AIFs are not eligible for clearing or custody, this is always the case with this securitisation. These solutions are fully bookable, as they are securities with ISIN and securities identification number.” A key criterion, especially for institutional investors.

A Luxembourg securitisation thus allows very effective access to interesting but difficult-to-invest products. “In addition, any such securitisation can be set up quickly and may even be tailored to individual requirements. The time from idea to market entry is therefore correspondingly short”, Knoblach highlighted. “For institutional investors, this offers much easier access to hedge funds or makes it even possible in the first place”, Knoblach concluded.