ASTANA — The Astana Financial Services Authority (AFSA) registered the Fonte Emerging Markets Umbrella Fund OEIC Limited as the Astana International Financial Center’s (AIFC) first umbrella fund on June 25. Although a single legal entity, the fund will function as an investment vehicle comprised of multiple sub-funds, each with its own investment objective and strategy.
Photo credit: AIFC
According to the AIFC, the Sub-Funds represent separate investment portfolios within the Central Fund, each with its own investment objective, strategy and assets. The Fund employs internal mechanisms to segregate the assets and liabilities of the Sub-Funds.
Umbrella funds benefit investment companies by allowing them to reduce operating costs by pooling the assets of multiple sub-funds. This strategy is particularly advantageous for smaller investment companies that may need assistance managing the financial and administrative burden of multiple separate funds.
In addition to cost savings, umbrella funds offer flexibility in terms of the type of investment product. Investment managers and advisors can create different sub-funds that address different investment strategies and asset classes, thereby meeting the needs of a wider range of clients. This is useful for companies that want to offer a range of socially responsible investment options, for example, as they can create sub-funds that focus on specific environmental, social and governance (ESG) criteria.
Umbrella funds also simplify management and operations. All sub-funds operate under a single legal and organizational structure, so there are uniform rules and regulations to follow. This simplifies compliance with regulatory requirements for investment managers and advisors and ensures consistent management of all investment products. A streamlined management framework reduces complexity and potential for errors, making the overall management process more efficient.
“Regulations that enable new types of fund structures mean more choice for investors and therefore more diversification of the economy. As AFSA’s regulatory environment continues to evolve, we are developing more advanced concepts that offer even greater value to the market and consumers,” said AFSA CEO Nurkhat Kusimov.
