A recent Santander publication reports that global banks could save up to $20bn a year by 2022 by implementing blockchain technology. There is an immense cost pressure on financial institutions and therefore inevitability about the pursuit of the encryption technology. We will no doubt see an aggressive application imminently. The World Economic Forum estimates that by 2027, assets equalling 10 percent of global GDP will be kept on a blockchain.

How do asset managers view this sea change?

It would seem that the asset management sector is sitting back and watching from afar despite the obvious benefits. According to the Wealth and Asset Management 2021 report by Roubini ThoughtLab, the widespread introduction of blockchain could push static asset managers out of business.

So why are asset managers not adopting?

There are a number of reasons for this. Asset managers don’t encounter the same weight of pressure on costs as the banks do.  This is due to the ability to pass costs on to customers, predominantly retail customers. Therefore the investment sector is under less pressure to chase prospective savings.

Also, blockchain applications will mainly be utilised in settlements. Many asset managers outsource this service to custodians.

What is the threat to the sector?

There are threats to the asset management business model. The threat comes from disruptors who may be inspired by the lower costs brought about by blockchain technologies. This may well be a new pasture for fintech entrepreneurs. There is a clear move by P2P firms to utilise blockchain across their distribution platforms to offer an expanded variety of investments.

The asset management sector must get a grasp of this nascent technology and prepare for it’s imminent arrival. Finscoms cares about the future of the sector, talk to us about how to prepare yourself.

Before this amendment, L-QIAIFs were prohibited from engaging in activities other than lending and certain related operations. The recently revised AIF Rulebook now states that L-QIAIFs are permitted to deal in investments connected to the loan origination strategy. Including investing in debt and equity securities of entities or groups to which the L-QIAIF lends or which are held for treasury, cash management or hedging purposes.

For a copy of the latest AIF Handbook click here.

How successful are funds in getting through to their target audience? Do funds invest in and/or adopt best marketing and communication practices? The answer is invariably ‘No’, funds don’t have the time nor experience, the only question they have is ‘how much capital will they raise?’.

Whether you are looking to raise 10 million or 100 million+ it is not possible to simply go into the outside world armed with a fund prospectus – often these prospectuses are over 100 pages long, are black & white and are indigestible – this is a well worn route taken by many other similar type funds.

A small investment into a marketing and communications strategy will return huge dividends, to understand what an investor is looking for and provide this is the KEY to raising capital. With the advent of the digital era, many investors are using search engines to find the next fund to invest in, too often they visit a website with no information i.e. fund performance to convert the investor to make contact.

Clearly a brand, a proactive website, and being seen and improve on search engine rankings deliver instant returns. Would you prefer to have inbound enquiries from investors as opposed to little or no momentum from say high retainers paid to third party marketing agencies? With a heaviliy congested route to the investor, ever wondered where are the investors and how to get your message in front of them to create an awareness of your fund all for a low investment?

A website is no longer an online brochure for your fund, it does and delivers on so much more. Get it right and you are on your way to raising capital in a digital environ, get it wrong and you are just one of hundreds of thousands of websites doing similar. Content and video marketing are key, but must all be in line with regulatory & compliance.

Imagine a video prospectus…

Imagine projecting your charisma through video…

Imagine making a flawless first impression…

Contact us, tell us your pain points in raising capital and you’ll find you not the only ones dealing with poor results, high costs, low penetration/conversion. Time to be efficient with your marketing and communications with instant tangibles, this is our bread and butter, what have you got to lose?

The success of the ICAV will continue to grow as the number of investment managers, international investors, fund financing counterparties, and fund service providers become more and more comfortable with the associated variables from structuring, incorporation, management, to distribution of ICAVs. The ICAV has without doubt enhanced Ireland’s competitiveness as domicile of choice for investment funds by virtue of its attractive legal structure, ease of conversion, and critically it also represents a simpler product for US investors from a tax perspective.

The main benefits

Structure

Before the establishment of the ICAV, the only viable option for an Irish corporate fund vehicle was to set up as an ‘investment company’ which is constituted as a public limited company (PLC) under the general Irish Companies Act. PLCs are subject to a number of company law requirements which are viewed as inappropriate for investment funds in contrast the ICAV is not subject to these requirements. As such there is a range of cost and administration cutting benefits. The main differences in requirements between a PLC and the ICAV are;

• The Central Bank of Ireland is the competent authority for the incorporation of the ICAV. It is both the registration and the supervisory authority for the ICAV.
• An ICAV has a governing document known as an instrument of incorporation (“IOI”). Similar to the memorandum and articles of association of a plc, the IOI is the constitutional document of an ICAV.
• No requirement to operate on the principle of risk spreading
• No requirement to have an annual general meeting once provision of at least 60 days written notice to all of the ICAV’s shareholders.
• No requirement to receive shareholder approval to amend the instrument of incorporation where the depositary is satisfied that such amendment is not prejudicial to shareholders and the amendment is not one which the Central Bank requires to be approved by shareholders
• Annual financial statements are allowed to be prepared at sub-fund level

As the ICAV legislation is distinct from that governing other Irish companies, it should be “future proof” against inadvertent consequences brought about from changes in Irish and/or European company law.

One of the main reasons that we are seeing US investors keenly adopting the ICAV is that it simplifies the US tax treatment. This is because the ICAV essentially allows taxable US investors to be regarded as if they had invested directly in the underlying investments of the ICAV. Thus allowing US investors access to relief under US tax treaties as well as access to tax credits pertaining to investments made by the fund. This also means that the complex US Passive Foreign Investment Company (PFIC) regime does not apply in this scenario. This management can be achieved because the ICAV is able to make an election under the US “check the box” rules to be treated as a “pass through” entity for US federal income tax purposes. Resulting in an ICAV being treated as a “partnership” (if it has more than one investor) or a “disregarded entity” (if it has only one investor) for US tax purposes. In contrast, an Irish fund established as a PLC cannot use the “check the box” option because it is deemed to be a “per se” corporation.

Conversion

Notably, established funds incorporated as ‘investment companies’ have the option of converting to ICAV status. Funds domiciled outside of Ireland can migrate into Ireland as ICAVs by continuation. An existing Irish ‘investment company’ can convert into an ICAV using a very straightforward conversion process. Conversion is by way of continuation, so that an ‘investment company’ converting into an ICAV keeps its identity and track 2 record. There will be no Irish tax on the conversion. A large number of existing Irish ‘investment companies’ will utilise the straightforward mechanism of conversion into an ICAV. To date there have only been a small number of conversions (roughly 25%), this is set to increase as a large number of UCITS managers are in the process of converting their ‘investment companies’ into an ICAV as part of the overall UCITS V implementation.

To date the ICAV has been a success. Combining the benefits of the ICAV with Ireland’s reputation as being one of the leading jurisdictions for the establishment and/or re-domiciliation of regulated investment funds, results in Ireland becoming the domicile of choice for funds looking to sell to U.S. taxable investors. Finscoms, through our chosen partners, will help you on your way to choosing a suitable structure and jurisdiction.

The proliferation of smartphones has led to us all being even more contactable, as it were, so if should be no surprise to see the maintained usage of email marketing. However, many organisations have not adapted their email marketing to reflect this new method of accessing one’s email on what is essentially a much smaller screen.

• Entice while you can: You must make it easy for your viewer to act, there are always barriers- loading times that are slower than usual, destination landing pages, some of which may not be mobile friendly. Engaging with the reader there and then is vital, try not to divert them to another web page. The copy and imagery of your email needs to entice them there and then.