FUND STRUCTURES

Below is a list of some of the types of structures which KMG Capital Markets can create and/or act as the appointed external Alternative Investment Fund Manager/ UCITS Manager.

AIF 
An Alternative Investment Fund ‘AIF’ holds investments in asset classes such as real estate, precious metals, art, wine, antiques, coins, or stamps and some financial assets such as commodities, private equity, distressed securities, hedge funds, managed futures, derivatives contracts, carbon credits, venture capital, film production, forestry and financial derivatives. 

Most alternative investment assets are held by institutional investors or accredited high-net-worth individuals because of their complex nature, narrow regulations and relative lack of liquidity. 

In European terms any structure that is not a UCITS (please see below) is by default an Alternative Investment Fund.

  • SIF
    A SIF ‘Specialized Investment Fund’ is a type of investment fund governed by the Luxembourgish law of the 13th February 2007, replacing the law of 1991 defining the legal framework for institutional funds and enlarging the distribution scope to ‘informed investors’. The SIF law significantly simplified the rules for setting up investment fund structures, ranging from simple investment strategies investing in listed securities to complex hedge funds, real estate and private equity funds and apply risk diversification.

    The SIF is only available to well informed investors defined by the law as institutional investors; professional investors, investors investing a minimum of EUR 125.000, or any other investors for which a credit institution or other professional of the financial sector has certified that they are aware of the risk they have undertaken.

  • SICAR
    A SICAR is an investment vehicle which is defined by its objects. The status of a SICAR is more flexible than under the ordinary law governing commercial companies.

    As an Investment Company in Risk Capital, it is a lightly regulated, flexible and tax efficient vehicle specifically tailored for private equity and venture capital investments.

    Due to the high risk associated with the investments made by a SICAR, it is only available to well informed investors defined by the law as institutional investors; professional investors, investors investing a minimum of EUR 125.000, or any other investors for which a credit institution or other professionals of the financial sector has certified that they are aware of the risk they have undertaken.

    SICARs are subject to less stringent investment restrictions and limitations.

  • QIF
    Irish Qualifying Investor Scheme ‘QIF’ is a regulated, specialist investment fund targeted at sophisticated and institutional investors, who must meet minimum subscription and financial resource requirements. To qualify as a QIF, a fund must have a minimum initial subscription requirement of €100,000 per investor, or equivalent in other currencies.

    The main advantage of the QIF is the removal of the Financial Regulator’s general conditions relating to investment policies and borrowing, thereby enabling sophisticated investors to use this structure for a wide range of investment purposes. Some of the many different types of funds that can be structured as a QIF include: alternative investment funds, including hedge funds, sovereign wealth funds and property/real estate funds. 

  • PIF
    Professional Investor Funds ‘PIFs’ are Malta’s primary investment fund vehicle catering for all types of ‘alternative investment fund’ (AIF) products which include hedge funds, real estate funds, private equity and other alternative funds, as well as traditional funds and are subject to minimal regulation compared to retail investment schemes.

    The PIF structure aims to provide a regulatory framework which is both robust and simultaneously adaptable to allow managers and promoters to innovate and develop new products to meet the changing needs of the market.

UCITS
A UCITS is a mutual fund based in the European Union. UCITS stands for ‘Undertakings for Collective Investment in Transferable Securities’ and UCITS funds can be sold to any investor within the European Union under a harmonized regulatory regime.

UCITS are open-ended funds investing in transferable securities subject to the same regulation in every EU Member State.

The UCITS passport endows investment funds with a significant number of cross-border marketing and distribution rights and also offers investment managers greater access to investors’ capital.

Due to the high level of regulatory oversight and strict operation rules, UCITS are suitable for retail investors.

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