As a reminder, fund management companies, including self-managed investment companies (SMICs), must be fully compliant by the end of June – with any new companies required to be compliant from launch.
In this article, we look at what fund distributors should check before selecting a third-party management company (ManCo) to help drive their fund forward.
"A good ManCo can demonstrate and evidence good governance"
Many Irish funds have been running for years. CP86 presents a timely opportunity to review how the fund is structured, and to improve it; increasing efficiency and bolstering the governance model.
Those who need guidance and support have the option of appointing a ManCo to help them digest another sizeable piece of regulation.
A good ManCo can demonstrate and evidence good governance. But it’s crucial that, when appointing one, you first check that the necessary expertise and systems are in place to ensure that they can carry out the job. And that they can prove it to the fund board and the Central Bank of Ireland.
What’s been lacking in the market to date is a robust due diligence questionnaire that fund distributors can use to inform their selection of a ManCo.
This will soon change when IFI Global, a leader in fund management research, launches a detailed questionnaire to help those looking for a ManCo. The first of its kind, it will represent an industry standard, covering areas such as capital adequacy, risk, and the experience and strength of the ManCo. It’s a very positive step and will provide a useful and, importantly, independent tool for funds to use.
If you’re already in the process of searching for a ManCo, there are a few hygiene factors you should be aware of:
We believe that the last point is particularly pertinent.
Technology is hugely important. You can have the right people with the right expertise, but, when it comes to risk management, you need to give them the right tools.
They’re looking at multiple funds, and multiple investment strategies - the ManCo model quickly becomes unscalable unless you invest properly in technology. It’s also crucial that the ManCo can independently assess each fund, running their own analysis and gathering their own data rather than relying on reports from investment managers.
‘Regtech’ (specifically how it can help funds to prioritise and implement new legislation without disrupting day-to-day operations) was a core topic at the recent Adminovate conference Link Asset Services attended in Dublin, along with over 300 peers from the global funds industry.
Paul Nunan, Managing Director at Link Asset Services, was a panellist for a session on where the fund administration industry is headed, and what the landscape will look like in 2025. As fund management evolves, services providers must evolve their products in tandem. At Link Fund Solutions, whether it be building in-house systems or investing in software, we’re focused on ensuring that we can carry out our roles effectively and support our partners’ needs.