Overview
An overview of Latin Trust’s challenges
Latin Trust is a small wealth management company located in Chile, with a strong focus on creating and managing Private Investment Funds ("FIPs").
FIPs are easy to incorporate and come with many benefits. But they also come with a few limitations, including a maximum limit of 49 investors and constraints on publicly marketing them as a collective investment vehicle. Furthermore, a tax reform proposal by the Chilean government at the time threatened to remove one of the benefits – a tax incentive that allows for a deferral on corporate tax (27%) at the Fund level, until the Fund distributes its assets to investors.
Industry | Fund Services |
Specialties | Managing and transforming investment vehicles |
Location | Chile |
The problem statement
A potential barrier to AUM growth
Among their portfolio of private investment vehicles, the Latin Trust team was managing a small but highly active FIP, investing in transferable outstanding invoices issued by factoring companies registered in Chile. This FIP proved to be very successful, providing a greater short-term return on investment (ROI of 24.4%) than other collective investment vehicles in the market.
Demand from new investors grew significantly as result, opening an attractive window of opportunity for Latin Trust to grow its assets under management ("AUM") through “retailization” - making investment funds more accessible and attractive to individual retail investors, rather than solely catering to sophisticated and institutional investors.
However, with the restriction of 49 investors and the looming loss of its income tax deferral incentive, it was proving challenging for Latin Trust to take advantage of this opportunity.
Our approach
How did Amicorp help?
Chilean legislation allows for three types of funds: Mutual Funds, Public Funds ("FIPUs"), and Private Investment Funds ("FIPs"). Transforming a Private Fund to a Public Fund is also allowed under Chilean law, however, there are substantially more regulatory and operational requirements to run a Public Fund, and can only be managed and administrated by an Administradora General de Fondos ("AGF").
As an AGF license holder, Amicorp helped Latin Trust transform this successful Private Fund into a Public Fund, a regulated collective investment vehicle with no restrictions on the number of investors and designed to be openly marketed to the public. On top of that, the Amicorp team listed the Fund's shares (quotas) on the Chilean Stock Exchange, providing an additional option to meet demands from investors looking for liquidity, and playing a part in pushing forward the global trend towards the “retailization” of evergreen investment funds.
If you would like to find out more about how we can support your fund structure, or our other fund administration services, please contact the team here.