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Four types of financial vehicles for a family office

Family office financial vehicles provide diversification

Most family offices have one main objective: to preserve the wealth of one or more families. To do so, these institutions must put together an investment strategy compatible with each group’s needs and characteristics.

Nowadays, it is normal for family offices to allocate its funds in different financial vehicles to maintain proper diversification.

What is a family office?

A family office is a company focused solely on managing large family fortunes.

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When a family has relatively small wealth, its members can manage the money independently or by hiring a financial advisor.

However, when the family’s wealth and holdings reach certain levels, a lot of knowledge, experience, and time is needed to manage the capital properly. At this point, the help of a family office is required.

A family is wise to consider a family office when their properties become too large to manage independently and too complex to oversee or coordinate,” details Cambridge Family Enterprise Group.

In addition to managing funds, a family office also provides tax and legal advice, a characteristic that differentiates it from a standard asset manager.

According to Josep Tapies, holder of the Family Business Chair at IESE Business School of the University of Navarra, a family office should not aim to create capital but to preserve the capital already created by the first generations. In addition, “it should maintain family unity and serve as an incubator of talent and entrepreneurial ideas.”

Some financial vehicles for a family office

While a family office can invest in virtually any financial asset, family office managers or family office advisors often choose to place money in some financial vehicles, including: 

  • Public investment funds are conventional mutual funds traded in the capital market that any investor can access. There are many types: equity, bond, commodity, mixed, short or long term, strongly diversified or highly focused, among others.
  • Private investment funds: these financial vehicles operate similarly to public ones, but a more significant amount of capital is required to participate, and the number of investors is limited.  Usually, they invest in illiquid assets or assets that are non-traded on the stock exchange.
  • Hedge funds: a family office can allocate part of its resources to a hedge fund. This financial vehicle that seeks to profit regardless of market trends and as freely as possible.
  • Real estate funds: in this case, the fund invests in properties, commercial or residential, to generate rental cash flows and real estate appreciation.

How to set up a family investment fund

Because not all family office advisors or family office managers have the tools, knowledge, or time to develop a financial vehicle that is compatible with the investors’ objectives, many of these managers rely on companies like FlexFunds, a global leader in setting and launching investment vehicles.

FlexFunds has an asset securitization program to develop exchange-listed products (ETPs) that allow family office managers to put together investment strategies in a practical and cost-efficient manner.

For a family office to be able to adopt FlexFunds ETPs, all you have to do is follow a series of five simple steps:

Step 1: Customized assessment and design of the ETP

Because securitization can occur on many assets of different natures (publicly listed in secondary markets and private), it is necessary to analyze each case and offer a custom-designed solution.

After contacting FlexFunds, a detailed study and data collection are carried out to establish the best possible strategy.

FlexFunds works with recognized international service providers to coordinate the process of creating and issuing the ETP best suited to your needs.

Step 2: due diligence and signing the engagement letter

Once the product structure is defined, the risk committee moves forward with the study and evaluation of the specific case.

Subsequently, the Engagement Letter is signed: the contract specifying the terms and conditions and the scope of the functions to be performed by FlexFunds.

Step 3: ETP structuring and document review

At this point, our legal and operations teams work hand in hand with the client to draft the documentation to structure the ETP. We proceed to the onboarding phase of the asset or portfolio manager.

In addition, the must-have documents for the investment vehicle are drafted and reviewed by the client and service providers. For example:

  • Series Memorandum: a document specifying the investment terms, risks, and general summary of the transaction.
  • Constituting Instrument:  formalizes the incorporation of the series.
  • Portfolio Management Agreement: the contract establishes the portfolio manager’s responsibilities and objectives and specifies the management criteria and restrictions.

Step 4: Issue and listing of the ETP

The assets securitization process materializes through the issuance of the ETP under a Special Purpose Vehicle (SPV).

The structuring process is now completed. At this point, your investment strategy is already repackaged in an ETP (Exchange Traded Product): a listed and tradable security. Additionally, an ISIN/CUSIP code is created to facilitate distribution.

Importantly, the investment strategy fully backs the issuance, which acts as collateral.

FlexFunds offers you a comprehensive service, including an underlying custodial account for the cash and securities of the investment strategy. In addition, FlexFunds acts as the calculation agent of the Net Asset Value (NAV), published on Bloomberg, and disseminated directly to the brokerage accounts of the investor who subscribe to the ETP.

Step 5: the ETP is now ready to be traded on Euroclear

Finally, the asset securitization process ends with the issuance and listing of the ETP. Now it is ready for distribution.

Investors can access your strategy easily, with a simple purchase transaction of the securities in Euroclear through their brokerage accounts from many custodians and Private Banking platforms.

Thus, thanks to FlexFunds’ solutions, you can access financial vehicles that securitize multiple asset classes, both conventional and alternative, for your family office.

FlexFunds is backed by the highest level of service providers, including Bank of New York Mellon, Interactive Brokers, Intertrust, and Apex.

To learn more about our ETPs for family offices, please visit our FlexPortfolio section, where you will find all the necessary information.


  • https://cfeg.com/insights_research/el-valor-del-family-office-un-analisis-profundo-de-los-beneficios-y-servicios-que-un-family-office-puede-brindar/
  • https://www.youtube.com/watch?v=jIfdHFZZj7s&t=6s
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We provide our services under the Global Note Programs through several entities that perform different activities. Among these entities are FlexFunds ETP LLC which acts as Calculation Agent, and FlexFunds Ltd, which acts as the Program Coordinator. Before making a decision to invest in the Global Note Programs, you should consider the following:

  1. Independent entities. FlexFunds ETP and FlexFunds Ltd. are not managers of the special purpose vehicles, collectively, responsible for the issuance of Notes under the Global Note Programs.
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