Why Start A Fund?
As an advisor, your goal is to provide investment solutions to your clients that
meet their needs. Once you've acquired a large number of clients, it becomes increasingly
difficult to service them while continuing to raise new assets. And, in a separate
accounts environment, it can be very difficult to run a complex investment strategy.
Starting a mutual fund, hedge fund or variable annuity can often help solve these
issues. To illustrate how starting a fund can help your business, we'd like to share
with you the story of one of our clients, we'll call them Advisor X.
Mutual Fund Creation
Advisor X, wanted to enhance their current investment strategy by adding vehicles
such as futures and derivatives but found themselves up against a brick wall. Because
it's difficult to implement changes in strategy one account at a time, they struggled
with the best way to make their strategy changes. Once Advisor X decided a pooled
investment vehicle would be the best way to enhance their strategy, they asked Gemini
to help them start a mutual fund.
Starting a mutual fund not only solved a problem for Advisor X but it also created
an opportunity for them. They are not only now able to execute their enhanced strategy,
they can also take on accounts they previously passed over because the accounts
were below the advisor's minimum account size for separate account management. These
smaller accounts fit easily into the mutual fund, allowing the advisor more time
to focus on their higher net worth clients.
Variable Annuity Creation
An additional opportunity starting a fund created for Advisor X was the chance to
use their strategy in the insurance environment. In order to more comprehensively
meet the needs of their clients with insurance assets, Gemini helped Advisor X create
a fund that can sit inside a variable insurance trust. This trust is used on a large
insurance platform and uses the same complex strategy utilized in Advisor X's mutual
fund.
Hedge Fund Creation
A few months later, Advisor X decided to ramp up their strategy to make it more
aggressive. In order to get the most leverage out of their newly enhanced strategy,
they asked Gemini to start a hedge fund. This fund allows their clients an opportunity
to work with the advisor they trust and invest in a much more aggressive vehicle.
Complete Offering
Advisor X, within a two-year period, started a mutual fund, a fund within a variable
insurance trust, and a hedge fund which allowed them to shape their client base
and increase the market reach of their business. Using Gemini as a business sounding
board, Advisor X was able to clarify their offering, using only the necessary pieces
to reach their goals and they were able to accomplish this at a competitive price.
Advisor X now offers a full slate of investment solutions that meet the needs of
even their most sophisticated clients. Their dynamic product offering evolved from
their desire to continue to raise assets, while servicing their existing clients
to the best of their ability. High net worth clients qualify for their hedge fund
or the separate accounts they already offered. Small- to medium-sized accounts are
no longer passed over because they are below the minimum account size for SMA and
fit right into Advisor X's mutual fund. Clients searching for insurance products
to further diversify their portfolio are now able to do so within Advisor X's variable
insurance trust.
Starting a pooled investment has many advantages for your business. We are always
available to talk through the process with you and offer your business the solutions
you need.