When your investors and distribution teams demand a steady stream of new investment products, and you’re aiming to get to market faster, standalone trusts can seem like the right move.
And while standalone trusts have their merits, they can monopolize valuable time that could be better spent on asset-raising. This is where the nuanced advantages of series trusts come to light.
Here, we compare and contrast series trusts and standalone trusts and provide some tips on what to look for when evaluating which one best supports your growth and vision.
Standalone trusts have long been an established go-to for larger asset managers, and historically, were often the path chosen by emerging managers. However, due to their higher costs, inflexibility and lack of scalability, we have observed that they are becoming less popular among emerging and lower-growth investment managers.
Setting up a standalone trust requires significant upfront costs and maintenance to ensure regulatory compliance and appropriate governance. Additionally, managers may underestimate the ongoing cost and complexity of overseeing multiple parties including the fund board, counsel, auditors and service providers. When changes need to be made or new investment vehicles added, the process can be time consuming, cutting into an investment manager's ability to quickly respond to market changes or capitalize on new opportunities.
Leveraging an established series trust can enhance speed to market and enable a manager to deliver new products and services at a lower cost. By sharing the expenses of a board, CCO, auditors and service providers, managers may be able to dramatically reduce potential expenses. In addition, if the trust is already established, time to market for new fund launches can be as little as 90 days. This is dramatically shorter than the typical 180+ days required to establish a new trust, select service providers and negotiate agreements.
What to look for in a Series Trust
When considering a series trust, it is essential to assess the provider’s reputation, capabilities and history of fostering growth of funds within the trust. The industry is turning to technology and operations innovators to meet their unique needs for efficiency and insights. This trend will accelerate in the future, and firms need to ensure that they choose a series trust continuously innovating and leveraging the latest tools for distribution enhancement and efficient shareholder servicing.
Another critical consideration is finding a series trust with a compliance-focused culture. One of the key advantages of a series trust is the shared governance and oversight scale that it provides.
Diving deeper into Series Trusts
For further guidance on how a series trust works, we invite you to join our upcoming 50-minute webinar event on December 5 at 1 p.m. EDT. You’ll hear from experts who will compare and contrast series trusts with stand-alone trusts so that you can fully evaluate your options and make the best choice for your organization.