Getting distribution right is crucial when launching UCITS funds. The last thing a manager wants is to struggle to grow their AUM. Not only does it look bad in the eyes of prospective investors, an inadequate marketing effort can quickly become a costly and frustrating exercise.
ML Capital has a two-fold approach to distribution, namely Passive and Active, which focuses on the manager and the investor respectively. ML Capital ensures the highest possible service quality for all fund structures on its MontLake UCITS platform so that the investor has the best possible investment experience.
Passive distribution is offered to all fund manager and focuses on market accessibility and visibility, ranging from the regulatory requirements of passporting to specific investor needs, such as tax reporting, platform accessibility and much more. Active distribution, on the other hand, is only offered to a small handful of fund managers.
“A lot of managers we work with already have their own distribution networks and sales teams, or do not meet our clients’ needs. In that situation, we simply provide infrastructure support on the platform,” explains Kenneth Sim (pictured), Head of Sales, ML Capital.
“Often, we invite managers with distribution needs to join MontLake because we specifically want their strategy to be part of our exclusive distribution mandate. The key is to ensure that our commitment is based on the demand for their investment strategy in the marketplace. Simply put, the priority for each sub-fund is to raise the most assets possible. To achieve this, we will only consider complementary, not competing, strategies.”
The goal is to always match investor demand with manager supply.
“We take the time to listen to our clients and focus our efforts on finding suitable investment solutions for their portfolios,” adds Sim.
The firm has seven active sales people dedicated to selling funds on the platform. They come from a range of different cultural backgrounds across Europe, are all multi-lingual and have experience raising capital in Europe. ML Capital’s core sales regions include the UK, Ireland, French-speaking parts of Europe (Geneva, Paris, Benelux), German-speaking parts of Europe (Zurich, Austria and Germany) and Italy.
ML Capital’s sales team has an ongoing dialogue with investors across Europe to determine the issues they face today, from a UCITS investment perspective. Where do they feel there is a lack of manager supply? What are the issues they are facing in their investment portfolios? With correlations rising in the market, how do you find managers and strategies that can help diversify some of the risks away in an investor’s portfolio?
“On the one hand we have seen demand from German allocators for higher volatility managers who look to maximise their alternatives exposure. However, in Switzerland and the UK demand remains strong for lower volatility products. The common thread is a desire for these returns and risk exposures to be taken independent of broader equity and fixed income market movements, coupled with an ability to protect or even perform in varying bear markets,” says Sim.
Whilst it’s important to know the investor, one also has to understand the market from a fund investment infrastructure perspective. If a fund is not correctly plumbed into each market, from a tax reporting and compliance perspective, or from a fund distribution platform perspective, it will face difficulties.
“Oftentimes, UCITS funds (on distribution platforms) fail to raise capital because the manager doesn’t receive the ongoing support to really engage with investors actively by doing roadshows, exchanging information and keeping the clients updated, all of which will make that distribution channel a success,” concludes Sim.
