ASTANA—The Astana Financial Services Authority (AFSA) registered Fonte Emerging Markets Umbrella Fund OEIC Limited as the first umbrella fund in Astana International Financial Centre (AIFC) on June 25. This fund serves as an investment vehicle comprising several sub-funds, each with unique investment objectives and strategies while remaining a single legal entity.
Photo credit: AIFC
According to AIFC, the sub-funds represent distinct investment portfolios within the central fund, each with its own investment objectives, strategies, and assets. The fund employs internal mechanisms to segregate the assets and liabilities of the sub-funds.
Umbrella funds benefit investment firms by pooling the assets of multiple sub-funds together, which can lower operating costs. This strategy is particularly advantageous for smaller investment firms, which might otherwise need help managing multiple standalone funds’ financial and administrative burdens.
In addition to cost savings, an umbrella fund offers flexibility regarding types of investment products. Investment managers and advisors can create a variety of sub-funds catering to different investment strategies and asset classes, allowing them to meet the needs of a broader range of clients. This can be useful for firms that want to offer, for example, a range of socially responsible investment options, as they can create sub-funds focused on specific environmental, social, and governance (ESG) criteria.
Umbrella funds also simplify administration and management. Since all the sub-funds operate under a single legal and organizational structure, there is a unified set of rules and regulations to follow. This simplifies compliance with regulatory requirements for investment managers and advisors, ensuring consistent management of all investment products. The streamlined administrative framework reduces the complexity and potential for errors, making the overall management process more efficient.
“Regulations that enable new types of fund structures mean more options for investors and consequently greater economic diversification. As our regulatory environment at AFSA continues to evolve, we develop more advanced concepts that provide better value for markets and consumers,” said Nurkhat Kushimov, AFSA’s Chief Executive Officer.
