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The art of orchestration as a European AIFM

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Luxembourg-based Fuchs Asset Management is not your typical AIFM provider. Its heritage is firmly rooted in wealth management. Having now grown into a team exceeding 100 people, it took the decision to diversify its offering and set up an AIFMD-compliant management company, receiving its license from the CSSF last June. 

“With the substance needed to run an AIF today, a lot of mid-sized managers are now thinking: are we going to take on the burden of running our own AIFM, or are we going to use a third party? 

“We now have the size and scale to consider such an AIFM hosting business,” says Pierre-Yves Augsburger, Director of Fuchs Asset Management. 

With its ManCo service, FAM provides the substance and the knowledge (from a compliance,risk distribution and monitoring perspective) for asset managers, private banks, fund managers and family offices, or simply entrepreneurs who want to create their vehicle to comply with the directive, but are frankly overawed. 

“We are able to offer them a tailor-made solution and bring a family office approach to small and medium-sized institutional clients. As the AIFM, we propose the structure, the licenses and the regulatory knowledge. There is a clear separation of tasks and responsibilities but it has to be done as a close partnership in the best interests of the managers and their investors. 

“We like to think of ourselves as the conductor of an orchestra. That’s what a hosted AIFM should be in our view,” explains CEO Timothe Fuchs (pictured).

In Fuchs’ view, the core focus of a fund’s portfolio management team should remain portfolio management and building/maintaining client relations. 

“That’s why it is important for the market to offer the third party AIFM solution, which is more an administrative, legal, risk management and compliance solution. Portfolio managers may not be comfortable or have any experience or particular interest in that side of things,” adds Fuchs. 

The firm wanted to be in a position to offer a high-level of service from day one and took pains to hire a raft of risk and compliance specialists while setting up the ManCo; constructing each section of the orchestra as it were.

“The right hand has to know what the left hand is doing. If a client has a specific request, we are ready to provide a full and prompt response. It doesn’t go through a committee of 25 different people,” adds Augsburger.

There are three solutions available to managers who partner with FAM:

• To launch a UCITS-compliant sub-fund 

• To launch an AIFMD-compliant sub-fund 

• To launch a dedicated fund and appoint Fuchs Asset Management as the AIFM.

“Our AIFM solution is open architecture. We know most of the main service providers in Luxembourg and Europe. Large banks might insist on only working with funds with at least EUR100m in assets, in which case the manager needs other options,” says Augsburger. 

This is where a hosted AIFM can bring added value to managers. By leveraging their network, they can help to ensure that any new AIF launched by a client appoints the most suitable service providers.

“For a private equity client of a certain size, we’ll offer one set of recommendations, while for a real estate fund we’ll offer a different set of recommendations. We continue to search for the right universe of counterparties to meet our clients’ needs,” concludes Fuchs. 

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