Efficient Management with Private Label Funds: Modern Solutions for Institutional Investors
Institutional investors face the challenge of managing their investments efficiently, ensuring transparency, and simultaneously enhancing their competitiveness. Private label funds offer tailored solutions that meet these demands and create significant added value through their versatility.
Strategic Advantages and Operational Efficiency
Private label funds provide institutional investors access to the specialized expertise of management companies (ManCos), particularly in implementing complex investment strategies such as hedge funds, private equity, venture capital, or real estate. This expertise supports innovative investment approaches, allowing investors to focus on their core competencies like asset selection. By outsourcing back-office and middle-office functions — such as administration, compliance, or risk management — fixed costs can be converted into variable costs. This reduces overheads, increases operational efficiency, and frees up financial resources for further investments.
Risk Management, Investment Controlling, and Transparency
ManCos handle critical tasks such as risk management and investment controlling to ensure that all investments align with the agreed mandate. Continuous portfolio monitoring ensures consistent implementation of the investment strategy and early detection of deviations. Additionally, ManCos are responsible for obtaining and reconciling valuations, as well as collecting and archiving annual reports and other relevant information. This structured documentation provides a transparent basis for informed decisionmaking while meeting regulatory requirements.
Delegating duties and responsibilities to the ManCo and custodian bank minimizes liability risks and protects investors' interests through clear guidelines for equal treatment of all investors. Comprehensive reporting aligned with regulatory requirements provides institutional investors with detailed information on fund performance and activities, fostering trust and supporting informed decision-making processes.
Flexible Infrastructure and Modern Currency Management
Private label funds feature an independent, scalable infrastructure that incorporates current developments in digitalization and corporate governance. This flexibility allows institutional investors to adapt to changing market conditions. Additionally, FX hedging based on net asset value (NAV) optimizes currency management, promoting financial stability and maximizing returns.
Cost Efficiency and Compliance
The structure of private label funds enables the creation of multiple share classes, ensuring fair cost distribution among different investors. Regular NAV reconciliations and automated processes like tracking corporate actions ensure equitable treatment of all investors. This is complemented by independent audits conducted by external auditors to ensure regulatory compliance and minimize risks.
Conclusion
Private label funds offer institutional investors a flexible, efficient, and secure solution for managing their assets. They combine specialized expertise, operational efficiency, comprehensive risk management, and modern infrastructure. These features make them an attractive option for long-term investments in a dynamic market environment.
Wolfdieter Schnee
Head of Fund Client & Investment Services,
Member of the Executive Management at VP Fund Solutions (Liechtenstein) AG