Private Label Funds

LGT Fund Management Company Ltd.

Private Label Funds

Your funds / assets in an optimal legal framework

Liechtenstein offers interesting solutions

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Table of contents

Part I Private Label Funds

1) Key benefits and opportunities

2) Set-up of your own investment fund: Essential basics

3) Steps to your Private Label Fund

4) Pricing

5) Concrete Example of a fund for UHNWI

Part II Liechtenstein and the LGT

1) Why Liechtenstein as a Fund Domicile?

2) LGT as your Partner

Part III Summary, contacts & legal information

Overview

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Key benefits and opportunities

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What are Private Label Funds (PLFs)?

Private Label Funds are tailor made investment funds

Provide the same protection as commercially offered funds (retail funds), but they are tailored to the customers needs (type of fund, legal structures)

Funds are very safe investment vehicles due to extensive regulation and supervision

Asset Protection: PLFs are segregated assets (off-balance sheet)

Liechtensteins PLFs compile a half year and annual report, are subject to PWC audit and continuous monitoring through the financial market authority

PLFs are treated the same way for tax purposes as commercially available funds, i.e. they do not pay taxes (no stamp duties, no VAT)

=> Private Label Funds:

all the advantages of commercial funds, but tailor made solution for your clients!

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PLFs allow flexible asset allocation (as well as pooling, subscription, redemption)

Complete flexibility in relation to TAA, asset classes, investment strategies, regions, currencies, multi-manager solutions ...

PLFs allow confidentiality (beneficial owner (BO) is not visible)

Name (label) of the fund is given by the client

And for the client of a PLF changes almost nothing

The client is completely free in the choice of assets, the allocation, the transactions etc. (assuming proper NAV calculation is possible and appropriate legal structure in place)

=> Private Label Funds:

provide security, transparency and complete alignment of interest for the beneficial owner

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What are Private Label Funds (PLFs)?

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The rationale for a Private Label Fund (PLF)

SecurityInvestment funds are separated assets and off-balance sheet, are

regulated investment products and supervised by the financial

market authority.

TransparencyYour assets in an investment fund are in a cost efficient, safe,

audited, transparent legal framework with an independent

reporting.

SimplicityYou dont want the hassle with the fund set-up, regulatory

framework, audits, NAV calculation, administration, reporting,

book keeping and fund share dealing?

Your own investment product Do you want to attract clients/investors by showing them your

track record of your public authorised and audited fund? A fund

with your brand & name and with your own investment strategy?

Focus on your asset management skillsDo you want to simplify your asset management? Instead of

buying a security for each client, just buying it once for the fund.

Easy access to the European MarketUCITS and future AIFs with domicile Liechtenstein have due to EU

passports fast and easy access to the whole European market.

Security

Transparency

Simplicity

Your own investment product

Focus on your asset management skills

Easy access to the European Market

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Your opportunities and benefits of a PLF

Individual structuring of individual sub-funds

as part of a segmented fund in the same way

as with mandates

Reduction in management and administration

expenses

Standardized reporting

Possibility of establishing a fund for qualified

investors with very few regulatory

requirements

Possible tax advantages when booking fund

units instead of paying tax on an individual

mandate or security

Own product under own brand

Individual investment policy and fee structure

Track record

Investment policy regularly reviewed

Standardized reporting

Possibility of public distribution

Reduction in management and

administration expenses

More flexibility with investments

More time for client services

Wealthy families/private clientsAsset managers

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Set-up of your own investment fund: Essential basics

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The external asset manager determines the label and focuses on his skills, i.e. investment management, client services and distribution

LGT fulfills all other necessary tasks, i.e. offers a complete service package (fund set-up, administration, reporting, compliance, audit, custody, trading, etc.) or only parts of it (BUT no asset management)

An external asset manager

+

LGTs fund service and depositary capabilities

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Set-up of your own investment fund

Definition of Private Label Funds

As a simplification, a Private Label Fund (PLF) combines:

YOU

LGT

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Custodian bank

agreementLGT Fund Management

Company Ltd.

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Set-up of your own investment fund

Private Label Fundse.g. segmented investment undertaking

Fund Management

Company

Under trusteeship

Asset management

agreement

Investments

Investment Advisor,

depending on asset

management agreement

(advisory agreement)

LGT Bank Ltd.

e.g. equities e.g. bonds

Segmented investment undertaking

(= Umbrella Fund)

Asset Manager

Client subscribes for

units, which are

booked to the client's

custody account

Intermediary

Fund Promoter

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Possible fund structures: Legal background

Fund structures

OGAW (UCITS)

F

u

n

d

t

y

p

e

IU for other

values

IU for other values

within increased risk

IU for

qualified investors

1 2 3 4

EU pass no EU pass no EU pass no EU pass

Future AIF -> EU Pass

Fund management

company

Contractual form /

Collective Trusteeship

Externally Managed

Self Managedvariable Capital

SICAV

Fixed Capital

SICAF

Investment Company

Corporate form

FUND

Segmented / Unsegmented

Unit Classes

Master-Feeder Structures

F

u

n

d

S

t

r

u

c

t

u

r

e

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Possible fund structures - UCITS

UCITSUndertakings for Collective Investment in Transferable Securities

There are various investment restrictions aimed at protecting retail investors

(but UCITS are also eligible for professional investors)

at least 90% of the assets must be invested in transferable securities, book-entry securities

and money market instruments that are traded on an exchange or other regulated market

open to the public (10% trash ratio)

short sales and investments in precious metals (physical or certificates) are not permitted

the maximum permitted investment in a position is 10%. All positions exceeding 5% may

not in total exceed 40% of the assets

etc.

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Possible fund structures Investment undertakings for other values (with increased risk)

IUs for other values Investment Undertakings

IUs for other values with increased risk

Fewer investment restrictions than in the case of a UCITS

investments are, for example, permitted in

transferable securities and book-entry securities, units of other investment undertakings,

money market instruments, and bank deposits (restricted focus possible)

derivative financial instruments

precious metals

2

Products with the suffix ... with increased risk are, for example, permitted to engage in

borrowing

derivative financial instruments for speculative purposes

investments that lack transparency or are extremely difficult to value

short sales

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IUs for qualified investors

IUs for qualified investors have almost no investment restrictions: Equities, bonds, derivatives, private equities, real estates, etc.

all these asset are allowed in any combination and ratios in this fund!

IUs are eligible for qualified investors such as:

natural persons for companies that are not commercially active with a securities portfolio in

excess of CHF 1 million at the time of subscription

investors that have concluded an asset management agreement with a person/entity

regulated with regard to asset management

regulated companies such as banks and investment firms, insurance companies, occupational

pension fund institutions, etc.

Possible fund structures Investment undertakings for qualified investors

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The following should be noted in particular: minimum subscription of CHF 250,000

funds for qualified investors are subject to less regulation in respect of authorization and

disclosure requirements, but are nonetheless subject to audit and comprehensive

supervision by the regulator

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Steps to your Private Label Fund

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Private Label Fund set-up process

Initial discussion/questionnaire

Internal audit (due diligence, viability

of project)

Offer submitted to client and

memorandum of understanding by client

Cooperation agreement/asset

management agreement

Documentation obtained from portfolio

manager/asset manager

Prospectus drawn up

Auditor (PWC) checks prospectus

Application for authorization submitted

to FMA authorization

Technical set-up

Subscription period/launch

Client

PWC

FMA

1

2

3

4

1

2

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Source: LGT

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Fund set-up: Subscription process

Subscription process (fund for qualified investors)

Investors

Local Bank

Segmented investment undertaking (Umbrella)

e.g. equities e.g. bondse.g. private

equity

Investors 1 The investor can subscribe units of the relevant fund via his local bank.

The local bank has to check the

subscription requirements (qualified

investor).

The local bank will forward the

subscription to LGT

No information about the investor has

to be delivered to LGT.

2

3

1

2

3

The investor can subscribe units of the

relevant fund directly via LGT.

LGT has to check the subscription

requirements (qualified investor).

Each fund (segment) can be subscribed

individually.

The fund management company does

not administrate a list of investors.

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UCITS IV IUs for qualified investors

Project work LGT ca. 1-2 weeks ca.1 week

Check prospectus ca. 2 weeks ca. 1 week

FMA (Max. time per law) max. 2 weeks ca. 1 week

Technical implementation ca. 1-2 weeks ca. 1 week

TOTAL TIME5-11 weeks

(normally 6 weeks)3-4 weeks

Minimum requirements

The minimum volume for a Private Label Fund is CHF 20 mn

In the case of segmented fund (= umbrella fund) the minimum volume is necessary for each segment

The asset manager must be prudentially supervised (for IUs, CH: SRO, UCITS: supervised)

LGT doesnt give any start credits for catch up the minimum volume

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Timeline for fund set-up

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LGTs Fund Service Offering

Open offering of all building blocks. Each building block can be acquired individually or in any desired combination

Private label funds:

Launching of UCITS and IUs (future AIF), domiciled in Liechtenstein

Support for promoters, asset managers in implementing regulatory requirements

Sophisticated reporting (pension funds, institutional clients, performance, consolidations etc.)

Transfer of currently offshore funds (e.g. Cayman Island, British Virgin Islands) to Liechtenstein

Transfer of currently EU / CH funds to Liechtenstein

Fund administration:

Administration of funds in FL

Mandates with external custodian banks using shadow accounting

Administration of funds outside Liechtenstein

Service for smaller and mid-sized fund companies without own administration

Depositary mandates:

Shadow accounting

depositary mandates

DepositaryFund-

administration

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Pricing

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There can be no conclusive answer here, as costs are affected by factors

such as volumes, the type of fund, valuation cycle, target investments etc.

Pricing

What does a private label fund cost?

One-off costs

set-up costs CHF 20000.-

check of prospectus by auditor ca. CHF 5-10000

authorization fees ca. CHF 0-10000

Recurring costs

fund administration ca. 7 - 15 bps

custodian bank ca. 8 - 20 bps

auditing costs ca. CHF 10000

FMA fees CHF 2000

transaction costs tbd

A detailed offer can be made once the large questionnaire has been completed

Likely costs: approx. 10-30 bps per annum plus third-party costs (official fees, auditors, etc.)

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Concrete Example of a fund for UHNWI

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General benefits for qualified investors

Rapid and low-priced approval procedure

Reduced statutory reporting and disclosure

requirements

Versatile benefits of segmentation

Not any cross liability between segments

More flexibility with investments

Allowance of different levels of liquidity

Flexible pricing coping with different investments

Fast representation of further asset classes

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Different segments of IU for qualified investors

IU for qualified

investors

Segment 1

trad.

investments

Segment 2

Hedge Funds

Segment 3

tbd

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Clear structure with segmentsIn general


Private Label Fund

Bond issues Shares Alternative

Sovereign

Corporate

High Yield

Emerging Markets

North America

Europe

Pacific

Emerging Markets

Hedge Funds

Private Equity

CashFamilieInvestors

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Dynamic Global Endowment Fond

Management company LGT Fund Management Company Ltd.

Fund administration LGT Fund Management Company Ltd.

Custodian Bank LGT Bank Ltd.maintains the unit register

Asset Management Asset Management Ltd.(tbd)delegated to an external provider

Auditing PWC funds & management company

Fund type Investment Undertaking (IU) for qualified investors

Legal form Trust

Fund structure Umbrella-Fund consisting of different segments

Public register Registration of the Global Endowment Fund

FMA one week for approval

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Fund structure with delegations

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Administration

Management Segregated Account

Sub-Asset Management

Agreement


Agreement



LGT Fund

Management

Company Ltd.

Asset ManagementAgreement

Lead Asset

Manager

LGT Bank Ltd.Custodian Bank

PwCAuditor

Sub Asset ManagerSub Asset Manager

Sub Asset Manager


Agreement


Sub Asset Manager


Agreement

Dynamic Global

Endowment Fund

FqA

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Investment policies

4.1 Investment objective and investment policy

In accordance with the principle of risk diversification, the

assets of the Fund shall be invested in securities and other

investments as described below. Barring any mentions in

clause 4 of divergent investment guidelines specific to the

Fund, the general investment guidelines as set forth in

clause 5 shall apply.

4.1.1 Global Endowment Fund Traditional

The investment objective for this segment is to invest the

Fund assets worldwide in a broadly diversified manner,

primarily in traditional asset classes (cash, bonds, stocks),

using investment instruments that are typically traded on

exchanges or other public markets.

The Fund assets are generally liquid, i.e. they can be sold

within a short period of time in their respective markets

under normal market conditions.

Within this segment, the Fund maintains the following

maximum limits for each asset class:

Cash positions max. 100%

Bonds max. 70%

Stocks max. 70%

Investment decisions within the segment are made based upon

the fundamental assessment of the asset class and issuing

institution in each case. The primary investment instruments

used are those that fulfill the investment criteria of

transparency, profit predictability and dynamism, financial

strength, and attractive price level.

Depending upon the market situation, there could be larger

shifts in the various asset classes within the boundaries of the

defined limits. Thus, the entire assets of the Fund for this

segment may be invested in cash positions when market

conditions are negative. The assets of this segment can

therefore be invested in the specified asset classes within the

specified limits at the discretion of the Asset Manager.

This segment is suitable for investors who are interested in a

medium-term capital growth with a balanced investment risk.

We refer to the general and segment-specific risks described in

clause 6.

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Basic information about the fund

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Reporting

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Examples of institutional reporting

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Reporting

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Reporting

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Reporting

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Why Liechtenstein as a Fund Domicile?

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Why Liechtenstein?

Easy access to European Markets: Liechtenstein as

Fund Domicile: Investment funds (UCITS, AIF) with

domicile Liechtenstein meet the requirements for

the EU passport allowing e.g. for distribution after a

fast notification procedure all over Europe

Legal certainty: Liechtenstein offers with the

implementation of the AIFMD legal security and fast

access to EEA which is interesting for Swiss AIFMs

Rapid approval procedure: The FMA has binding

timelines for approval of new funds, far shorter

than elsewhere

Favorable tax environment: Liechtenstein has no

stamp duty (15bps in CH) and no tax for funds

(Luxembourg: tax dabonnement (1-5bps of NAV

p.a.))

Interesting options: Liechtenstein offers sound legal

protection in line with the EU requirements and

offers also investment vehicles which are not

available in Switzerland (i.e. certain Single Investor

Funds)


Easy access to European Markets

Legal certainty

Rapid approval procedure

Favorable tax environment

Interesting options

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Comparison of locations

Advantages versus Switzerland:

Funds under Liechtenstein law have simplified

access to the EU market (EU passport)

Comparatively quick authorization process

As a rule, no prudential supervision for Swiss

asset managers -> must be subject to direct

FINMA supervision if active as an asset

manager for a Liechtenstein UCITS and future

AIF

Advantages versus offshore:

Liechtenstein UCITS meet the requirements

for recognition in the EU and the EEA (EU

passport) and future AIF

Equivalence of Liechtenstein supervisory

authorities with supervisory authorities in the

EU/EEA is ensured

Income not subject to VAT

No stamp duty on purchase or sale

Euroclear settlement with ISIN & VALOR

Booked in clients custody account with their

own bank, with prices updated via

international data providers

Liechtenstein versus SwitzerlandLiechtenstein versus offshore

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Taxation Liechtenstein Luxembourg

Fund assets (assets under management

AuM)No net asset tax Taxe dabonnement 1-5bps of AuM!

Tax environment what taxes are

applicable at fund level

Tax exempt on income and capital gains

No WHT on distributions made to

investors

Tax exempt on income and capital gains

No WHT on distributions made to

investors

Corporate tax rate for a Management

Company

12.5% (self-governing)

Max. 1200CHF (non-self-governing)28.8% for Luxembourg town

Regulation

Regulatory body Finanzmarkt Aufsicht (FMA)Commission de Surveillance du Sector

Financier (CSSF)

Timeframe for approval by regulatory

bodyYes, FMA has binding (shorter) timelines No

Promoter /Sponsor approval required No

Sponsor Letter of Assurance for UCITS,

Promoter for Part II UCIs, No for SIFs and

SICARs but will change because of AIFMD

Capital requirements for a fund promoter NoneEUR 8000000 (for Part II UCIs open to

retail public) with exceptions

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Fund Domicile Matrix (selection of key differences)

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LGT as your Partner

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LGT as your Partner

* Tier 1 Ratio is the ratio of a banks capital to its total risk-weighted assets.

In contrast to other banks, LGT is in a very comfortable position. Minimum requirement by law: 8%.

LGT GroupTotal AuA: CHF 128.8 billion

Tier 1 Ratio*: 18.4%

Moodys: Aa2

Standard & Poors: A+

Number of staff: 2081

Locations globally: more than 20

LGT Group founded as an universal bank in 1920, owned by the Princely House

of Liechtenstein for over 80 years

Simple and stable ownership structure allows for a long-term oriented corporate

strategy and independent decisions

Alignment of investment interests between clients, owner and employees

With a strong capital basis we can pursue our long-term strategic goals unperturbed

Source: LGT

Why LGT? Facts and Figures (as of December 31, 2014)

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LGT as your Partner

What benefits can LGT Fund Management Company Ltd offer clients?

Up-to-date on current issues

(e.g. AIFM, taxes)

Expertise in setting up and

administration of (own) funds

Global approaches to solutions

thanks to worldwide network

Quality and

stability

Infrastructure and

experience

Client

Open to innovative

solutions

Coordination by

one contact person

One-stop solution

Source: LGT

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Part III Summary, contacts & legal information

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PLF Takeaways

Why PLF?

Security

Transparency

Efficiency

Tax

UHNWI, family offices, independent asset managers

Particularly interesting for these customers: IU for qualified investors

PLF = secure investment vehicle

Off-balance sheet, controlling through AM (external), Auditor (PWC), LGT Fund Management

Company, custodian bank

Alignment of interest (we're not the PM), completely independent review of the investment guidelines,

semi-annual and annual report, regular calculation of NAV and reporting (depending on customers

needs), assets at different third-party custodians may be consolidated (shadow accounting)

No management or administration effort for the client, regulatory requirements are met by the fund,

SPOC, i.e. single point of contact for the client

Flexibility: transfer of assets and allocation in families, centralised management of assets,

Easy transfer of assets

In an IU for qualified investors (lowest regulatory requirements, but the same benefits), virtually all

asset classes (Please note: NAV-calculation) can be brought into the fund

FL-Investment funds are exempt from tax, no stamp duty and no VAT

One line in the tax declaration for the client

Allocation of income and losses (netting effects)

Tax deferral effects

No time limit on losses carried forward

Target Clients

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PLF Takeaways

Why Liechtenstein?

Legal certainty Clear commitment of the government to fund center Liechtenstein EU-compliant legislation, UCITSG, AIFMG (SICAVs, SICAFs, SIF, etc.), single-investor-fund

Thanks to EU passport simplified distribution authorization

European recognition of the FMA as equivalent supervisory authority

Rapid approval Time-and cost-efficient FMA (binding time frame), approval also for sophisticated fund projects in a short time

Tax No tax for the funds in Liechtenstein (LUX: 1-5bps), No stamp duty, no VAT

Rating AAA rating of Liechtenstein, single EEA Member with CHF

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Summary

Your benefits of a private label fund

Security

A private label fund provides highest investor protection since the fund represents separate assets

(off balance sheet) and is fully compliant with the actual regulatory requirements

Improved risk management

Complete independent controlling of investment limits specified by the investor

Controls threefold: by the asset manager, by the external auditor, by LGT Fund Management

Company Ltd.

Operational benefits; more speed, less cost, less complexity

All investments are grouped in one single, clear legal framework

Daily/weekly/monthly valuation/reporting and NAV of the fund

Simplification of the tax return (one single line instead of x000 transactions)

Easy transfer of shares

Semi-annual and annual financial reports, audited

Tax benefits

Offsetting of realized capital losses against income and capital gains

No VAT when expenses are charged to the fund

Tax deferral effects

No time limit in case of deficit carried forward

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Contacts at LGT

Contacts for your private label solutions

French Speaking Clients:

Romain Jacoby

Private Labelling

Tel. +423 235 1777

[email protected]

Dr. Stefan Lindemann, LL.M.

CEO LGT Fund Management

Company Ltd.

Tel. +423 235 2253

[email protected]

Mag. Thomas Marte, LL.M.

Wealth Structuring

Tel. +423 235 2837

[email protected]

Roger Schaedler

Deputy CEO LGT Fund

Management Company Ltd.

Tel. +423 235 1507

[email protected]

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Legal information

This document is intended solely for the recipient and may not be duplicated, distributed or published either in electronic or any other form

without the prior written consent of LGT Group Foundation. This publication is for your information only and is not intended as an offer,

solicitation of an offer, public advertisement or recommendation to buy or sell any investment or other specific product. Its content has

been prepared by our staff and is based on sources of information we consider to be reliable. However, we cannot provide any undertaking

or guarantee as to it being correct, complete and up to date. The circumstances and principles to which the information contained in this

publication relates may change at any time. Once published, therefore, information shall not be understood as implying that no change has

taken place since its publication or that it is still up to date. The information in this publication does not constitute an aid for decision-

making in relation to financial, legal, tax or other consulting matters, nor should any investment or other decisions be made on the basis of

this information alone. It is recommended that advice be obtained from a qualified expert. Investors should be aware that the value of

investments can fall as well as rise. Positive performance in the past is therefore no guarantee of positive performance in the future.

Forecasts are not a reliable indicator of future value developments. The risk of price and foreign currency losses and of fluctuations in return

as a result of unfavorable exchange rate movements cannot be ruled out. There is a possibility that investors will not recover the full amount

they initially invested. We disclaim without qualification all liability for any loss or damage of any kind, whether direct, indirect or

consequential, which may be incurred through the use of this publication. This publication is not intended for persons subject to legislation

that prohibits its distribution or makes its distribution contingent upon an approval. Any person coming into possession of this publication

shall therefore be obliged to find out about any restrictions that may apply and to comply with them.

It is up to potential investors to obtain comprehensive information and appropriate advice in their home country, country of residence or

country of domicile about the applicable legal requirements and any tax consequences, foreign currency restrictions or foreign exchange

controls and any other aspects that are of relevance prior to any decision to subscribe to, purchase, own, exchange or redeem such

investments, or enter into any other transaction in relation to same.

The securities and rights mentioned in this document may not be purchased or held by investors or for investors domiciled in the USA

and/or with US citizenship, nor may such securities and rights be transferred to them.

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Picture description

"The Violin Player", 1653

GERARD DOU 16131675

"The Violin Player" by Gerard Dou shows a man leaning casually out of a window, playing his violin while gazing into the distance. Dou draws upon a sketch by Gerrit van Honthorst, although he has transformed this into a smaller format. The superb quality of his painting, greatly admired by collectors for its painstaking and elaborate treatment, also generated very high sales prices. Dou's clarity of vision is demonstrated by the wind-ruffled sheet music and the richly-ornamented carpet draped over the parapet. The smoothly-applied paint contains no trace of brushwork. He owes the gentle light effects, subtle chiaroscuro and soft shapes to his teacher Rembrandt. Through the window the viewer can see a young man grinding pigment in a workshop. The relief under the parapet contains a similar reference, showing inter alia a putto holding a mask before his face, symbolising painting. The musician himself could be the artist and proprietor of the workshop, for Dutch painters often depicted artists as musicians. Dou's visual motif is probably the effects of music as an inspiration for painters.

LIECHTENSTEIN. The Princely Collections, Vaduz-Vienna

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Documents

Private Label Funds