Examining the Pricing Vendor Due Diligence Process in the Mutual Fund Space

Jun 12, 2018 10:00:00 AM  |  '40 Act , Regulatory

Rule 38a-1, under the Investment Company Act of 1940, commonly called the “Compliance Rule,” identifies the investment adviser, principal underwriter, administrator and transfer agent as the “significant” service providers to a mutual fund.  The Rule further states that a due diligence review of the policies and procedures should be completed for these service providers at least annually. Fund compliance officers and fund boards are now quite accustomed to this process.

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Part 3 - Launching a Mutual Fund: Compliance & Regulatory Insights

May 29, 2018 10:00:00 AM  |  '40 Act , Regulatory

This three-part series covers not only what it takes to launch a fund, but what it takes to launch a potentially successful fund. If you missed the first two installments, they can be accessed here:

Part 1 – Launching a Mutual Fund: Costs of Success

Part 2 - Launching a Mutual Fund: Top 5 FAQs

In this final post, the compliance and regulatory types of questions regarding a fund launch are answered.

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Part 2 - Launching a ’40 Act Mutual Fund: Top 5 FAQs

May 22, 2018 10:00:00 AM  |  '40 Act , Fund Structure

In part 1, we reviewed the considerations for long-term success when launching a fund, not just the immediate costs to organize and operate a fund. In the next two parts, we answer the top 10 questions that are most frequently asked by advisers exploring a mutual fund launch. As with any undertaking of this magnitude, there can be lots of questions and lots of variables to consider. These two blog posts will address typical questions and provide high level answers based on an open-end mutual fund launch.  

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Part 1 - Launching a Mutual Fund: Costs of Success

May 15, 2018 10:00:00 AM  |  '40 Act , Distribution

Typically, when an investment adviser thinks about launching a mutual fund, they commonly ask, “How much does it cost to launch a mutual fund?” The more prudent question to ask would be, “How much does it cost to launch a successful mutual fund?”

These days many funds are launched using the series trust structure, which can afford an adviser some efficiencies in organization and operational cost and reduced time to market. Those are certainly important considerations, and we will discuss those in more depth later in the next two successive blog postings. However, to help focus on long-term success, advisers should consider several other factors before they think about the organization and operational costs for a fund. What are those factors?

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Launching a Mutual Fund Three-Part Series

May 8, 2018 10:00:00 AM  |  '40 Act

Launching a ’40 Act mutual fund can be an exciting endeavor for investment advisers looking to expand their solutions footprint.  As with any new venture, it requires prudent forethought and planning to ensure the best chance of success.  Usually when an investment adviser initially explores launching a mutual fund, they think about the outright initial costs associated with launching a fund, along with setting up the structure, timing and various regulatory aspects. In addition to these considerations, investment managers also need to keep in mind the cost of success, the true cost of launching a mutual fund; what may help make the fund successful in the long run. The evolving regulatory and distribution landscape can be intimidating, but with thorough preparation, planning and the right partners, potential pitfalls can be avoided and helpful insights can be gained that may lead to greater success. 

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Current Status on the Tax Cuts & Jobs Act Impact to Mutual Funds

Apr 25, 2018 10:00:00 AM  |  '40 Act , Regulatory

Tax considerations are an important aspect of fund accounting, financial reporting and portfolio management for investment firms and investment advisers, and can have significant negative effects on the performance of funds if not addressed in a timely or appropriate manner. Therefore, we are taking the opportunity to provide a status report on the Tax Cuts & Jobs Act (the “Act”) and issues related to the Act affecting our industry.

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Breaking Down Breaking Even in Mutual Fund Operations

Apr 4, 2018 9:33:45 AM  |  '40 Act

Early in the process of an investment firm contemplating starting a mutual fund, whether from scratch or by converting assets from another product, such as a SMA or private fund, the question of “break even” is almost certainly asked. Investment managers want to know when their investment in the operating costs of a mutual fund will pay dividends toward their own bottom line. What on the face seems like a simple question actually gives rise to many factors that need to be considered. But first, we need to address what does it mean to “break even”?

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FINRA 2018 Regulatory and Exam Priorities

Mar 20, 2018 10:00:00 AM  |  '40 Act , Regulatory

A Condensed Digest for Investment Advisers

In January 2018, the Financial Industry Regulatory Authority (FINRA) published its annual Regulatory and Examination Priorities Letter, which identifies the topics that FINRA will focus on in the coming year.  The Priorities Letter, along with FINRA’s 2017 Examination Findings Report, serves as a resource for broker-dealers to enhance their compliance, supervisory and risk management programs and to prepare for their FINRA examination. Among the topics identified in the letter as areas of focus in 2018 are fraud, high-risk firms and brokers, operational and financial risks – including technology governance and cybersecurity – and market regulation.

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An SEC Office Shares Exam Findings – Key Insights for Compliance Officers

Mar 6, 2018 10:00:00 AM  |  '40 Act , Regulatory

The Fort Worth, Texas regional office of the SEC held a teleconference call in January this year to discuss some of the office’s 2017 exam findings as well as other areas of focus. This was a first-of-its-kind call with registered investment advisers in the region with the purpose of increasing transparency and communication. Even though this was a regional office of the SEC providing outreach and insights, the topics presented are applicable to all registered investment advisers. Following are some of the main points discussed on the call, along with key takeaways.

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Bitcoin – RIC Buyers Beware of Potential Tax Traps

Feb 6, 2018 10:00:00 AM  |  '40 Act , Regulatory

We have all seen the headlines and read some articles related to Bitcoin. What was once an obscure concept on the periphery has now transformed into a digital gold rush. The wild fluctuations in Bitcoin values has piqued both investor and regulatory interest.

The interest in Bitcoin was heightened on December 1, 2017, when the Commodities Future Trading Commission (CFTC) allowed CME Group, Inc. and CBOE Global Markets, Inc. to list Bitcoin futures contracts. The decision by the CFTC seemed to provide legitimacy to Bitcoin from an investor perspective...

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