Executive Summary
In family office practice, how assets are held and managed through legal and financial structures is as important as what the family invests in.
Major financial and wealth-management centres use a wide range of structures. These include Switzerland’s Actively Managed Certificate (AMC), which packages an investment strategy as a single security; Variable Capital Companies (VCCs) in Singapore and Mauritius, which are corporate fund structures capable of housing multiple investment strategies or pools of assets; various Cayman fund vehicles and Alternative Investment Vehicles (AIVs), which separate particular investments; Special Purpose Vehicles (SPVs) in many jurisdictions; and Foundations, which are used to hold assets and plan succession.
These structures are not simply national variations of a single regime.
This report groups them into three broad functions:
1. Investment Product: packaging an investment strategy as a product2. Investment Platform / Vehicle: separating and managing investment strategies, assets, and risks3. Ownership / Governance: determining who owns and manages assets and how they pass to the next generation
These are the three functions used throughout this report.
It then examines the differences among them through the lens of Ownership Architecture: the design of who owns what, who manages it, who receives the economic benefits, and how control and wealth pass to the next generation.
Technical terms are explained in plain language when they first appear. The purpose is not to memorise the names of legal regimes, but to understand the problem each structure is designed to solve.
1 Before deciding what to invest in, decide how to hold it
Discussions of asset management usually focus on asset classes such as equities, bonds, real estate, private equity, and venture capital.
As wealth grows, investments spread across jurisdictions, and succession becomes a concern, another set of questions emerges.
Who should own the assets, and through which legal or financial structure?
Assets may be held directly by an individual or through a company in the company’s name.
Global funds and family offices, however, use a wider range of arrangements.
An investment strategy itself can be turned into a financial product. Multiple strategies can be placed within one fund platform. A specific investment or transaction can be separated into its own vehicle.
Assets can also be separated from an individual and held by a Foundation under rules designed to govern them across generations.
Asset management therefore involves not only what to own, but also the structure in which to own it.
This report considers these arrangements in three categories.
CategoryRepresentative examplesPrincipal function1 Investment ProductSwiss AMCPackaging an investment strategy as a product2 Investment Platform / VehicleSingapore VCC, Mauritius VCC, Cayman fund vehicles and AIVs or SPVsSeparating and managing investment strategies, assets, and risks3 Ownership / GovernanceADGM Foundation, DIFC Foundation, Panama Private Interest FoundationAsset ownership, succession, and family governance
The important point is not to treat them as the same regime implemented in different countries.
Contents
- Part I Turning an investment strategy into a product
- Part II Separating and managing investment strategies, assets, and risks
- Part III Determining who owns the assets and how they pass to the next generation
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