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How is CRS/FATCA reporting done by the Irish SPVs in the Programme?

The Irish SPVs are Reporting Financial Institutions for purposes of CRS/FATCA, but it reports no “reportable accounts” because all holders of the issued notes are reporting financial institutions that have the responsibility for doing the relevant CRS/FATCA reporting. The Irish SPVs, through their Trustees, make a filing to that effect.

How is portfolio management with a FlexETP superior to an LLC or partnership?

For a manager, the FlexETP Program provides complete administration services by some of the most well-known and top-tier financial institutions in the world, allowing the Manager to concentrate entirely on managing assets and growing the size of their portfolio. Furthermore, Investors in partnerships and limited liability companies are required, in most jurisdictions, to realize capital gains and losses in the year of the transaction. However, when the investor invests in the managed portfolio through a FlexETP the investor will not realize a taxable event until the note is sold or redeemed.

How much does it cost to establish a FlexETP?

The cost to establish a FlexETP is very competitive and designed to allow for low risk launch and inexpensive maintenance. Final costs depend upon several factors, including, among other things, the types of underlying assets and the issue size. For information about the costs of establishing a FlexETP for your investment portfolio or special project please contact our client relations team at info@flexfundsetp.com.

How can issuing a FlexETP earn an advisor more revenue?

Administration costs inherent in managing investment portfolios average just less than one percent of assets under management, exclusive of management fees. By utilizing a FlexETP as an investment management vehicle the Manager can reduce these administrative costs by as much as forty percent or more with the savings being passed through to the client or retained by the advisor in the form of an increased management fee. In addition, the FlexETP’s distribution advantages and efficient administration allow managers to focus on growing their assets under management.

Who manages the strategy behind the FlexETP?

The strategy is managed by an appointed Portfolio Manager. The investment strategy is defined on the Issuance documents according to the Portfolio Manager’s direction. Also, the Portfolio Manager may establish the terms for their Management fee, which will be disclosed in the Issuance Documentation.

How long does it take to issue more notes?

It takes about 8 business days to issue an additional tranche on an existing FlexETP Series.

How long does it take to issue a FlexETP?

The timing to complete an issuance is around 4 weeks for the FlexETP Fund and about 6 weeks for the FlexETP Wrapper and Loan. Issuance timing is dependant on a timely completion of the initial term sheet by the Portfolio Manager.

Who can issue a FlexETP?

A FlexETP Series is issued by the program’s Issuer at the request of an investment advisor, developer or project manager as the named Portfolio Manager. The Portfolio Manager has full control of the investment strategy, though for legal purposes has no issuer-related liability. FlexFunds can arrange a FlexETP issuance for many kinds of investment professionals, such as registered investment advisors, portfolio managers, broker-dealers, family offices, and other money and asset managers.

Who is FlexFunds?

FlexFunds LLC. is the Arranger in respect of the Notes and is appointed as Calculation Agent, and as such shall be responsible for certain management and administrative functions in relation to the Notes.

Is there Issuer risk on the FlexETPs?

The characteristics of the Issuer as an orphan SPV (owned by Charitable Trust Companies) ensures that there is no Issuer risk related to actions by the Issuer or any of its shareholders. Furthermore, all underlying assets of all FlexETPs and any rights and benefits resulting from them are secured to the Trustee for the benefit of Noteholders (investors).

Who issues the FlexETP?

The Issuer of the program is an Irish public limited liability company that has been established as a Special Purpose Vehicles. The principal activity of the Issuer is the issuance of FlexETP Notes.

What is a FlexETP?

A FlexETP is an exchange-traded product (in the form of a note) that provides a solution for investment management and distribution. The FlexETP’s price is linked to the value of the underlying assets or Portfolio.

When can an investor liquidate a FlexETP?

An investor can liquidate a FlexETP in accordance with the terms set forth in the issuing documentation, which may include holding the note until maturity or liquidating the note at specified time windows, as stipulated by the Manager. In general, if there are no liquidity restrictions, investors may redeem their notes within 5 business days.

Is there a secondary market?

There is no secondary market available for FlexETP Notes, the participations may be issued and redeemed or existing notes may be transferred from one investor to another.

What is the minimum investment in a FlexETP?

The minimum investment varies depending on the residence of the investor. In most Central and South American countries there is no regulatory minimum, but the advisor for whom a note is issued may establish their own minimums. Investors within the European Union might be required to invest a minimum of one-hundred thousand Euros. Other requirements may be present for specific jurisdictions, please contact us for more information on FlexETP requirements and restrictions.

Are the FlexETP Notes transferable?

Once issued, the notes can be transferred between investors. Investors should be aware of any selling restrictions applicable in their jurisdiction.

Why would a U.S. advisor issue a FlexETP for a non-US investors?

FlexETPs are listed with a registered depository such as Euroclear or Clearstream, therefore, a note can be purchased by non-U.S. investors worldwide, significantly easing the flow of foreign capital into U.S. projects; meaning foreign investors can invest in a U.S. project or a U.S. money manager’s strategy quickly and directly through their existing brokerage account.

FlexETPs are a Regulation S security, what does this mean?

FlexETPs have been designed for non-U.S. investors. In the United States, they are considered a Reg S security and therefore are subject special restrictions. We recommend you consult with your legal counsel regarding the Reg S restrictions and always before making any investment decisions.

Who can purchase a FlexETP?

FlexETP Notes may be subject to selling restrictions in several jurisdictions. In the United States, the notes fall under Regulation S and cannot be purchased by U.S. persons. Some restrictions apply to investors in the European Union in accordance with the prospectus directive regulation.

What are the common Custody Platforms to operate the strategy of a FlexETP Fund?

For the FlexETP Fund, the Custody Accounts can be opened in Interactive Brokers and Citi. Portfolio Managers can invest directly through these platforms.

Where is the FlexETP listed and who clears it?

FlexETPs are listed in the Vienna Stock Exchange and it is cleared through Euroclear.

How can investors buy a FlexETP?

All FlexETP are registered with Euroclear or Clearstream and are assigned a unique ISIN/CUSIP number, permitting the investors to purchase the note directly through their existing brokerage account.

Do FlexETPs have a Bloomberg page?

Each FlexETP Series will have a unique ISIN number and Bloomberg page.

Is the price distributed to the investors?

Yes. The price of the FlexETP (NAV) is distributed to the investor’s account through FlexFunds’ price dissemination partners on a pre-establish regular basis.

What value will investors see on their brokerage account statement?

The value of a FlexETP seen on a brokerage account statement will depend upon the composition of the portfolio; a portfolio consisting solely of market-priced securities will reflect the NAV (Net Asset Value) of the FlexETP’s underlying securities minus operating expenses and fees, while a portfolio consisting of non-marketable securities or other assets may be reflected at cost.

Will the investors see the FlexETP on their brokerage account statement?

Yes, investors who purchase a FlexETP through their brokerage account will see the security price reflected on their brokerage account statement on a regular basis.

Who is the Calculation Agent?

The Calculation Agent is FlexFunds LTD.

Is there a NAV calculation?

The NAV is calculated on a regular basis (monthly/weekly) in accordance to the composition of the Portfolio. The NAV is published in Bloomberg as well as distributed to the investors’ brokerage accounts.

Does the FlexETP have a Subscription Agreement or PPM?

No, the FlexETP Notes are Exchange Traded Products which are purchased directly from the investor’s brokerage account. There is however a Series Memorandum, which specifies the Conditions of the Notes (terms of investment) as well as identifying Risks and providing information on the transaction Parties and the Series Assets.

Is a FlexETP required to make interest payments?

No, a FlexETP is not required to make interest payments at any certain rate or at any specific times, unless set forth in the prospectus and issuing documentation. The distribution of gains, losses and earned interest is determined by the advisor as are the procedures and valuation methods to be applied for early redemptions, liquidations, and at the FlexETP’s maturity.

When does a FlexETP Mature?

FlexETPs can mature in 2 to 30 years, and the maturity can be extended indefinitely. The Notes can be called or redeemed pursuant to the terms set forth in the issuing documentation; the advisor has significant flexibility with respect to the terms of the FlexETP Series issued on their behalf.

What type of underlying assets can be invested in?

FlexETPs offer great flexibility in the type of allowed underlying assets. The strategy can invest in either listed or unlisted securities and assets. Furthermore, underlying assets can originate from different countries (with some restrictions).

Are the FlexETP series open end or close end?

The FlexETP series are open by default, they allow for additional increases over the life of such Series. However, a Manager may choose to create a closed Series.

Do FlexETPs have custom (white-label) names?

The name of the FlexETP Series will be custom for each Series. However, some Custody Platforms will show the name of the Issuer in combination with the assigned name.

How does the Portfolio Manager get paid?

The Portfolio Manager gets paid directly by the paying agent from the assets held within the note’s underlying account.

Who can be a Portfolio Manager?

The Portfolio Manager can be a regulated entity in its specific jurisdiction. This entity is designated when the series is created and will abide by the determined strategy in the portfolio management agreement.

Are investors invoiced for the advisory fee?

No, the management fee is paid directly by the administrative paying agent from the assets held within the note’s underlying account. Investors are never invoiced separately nor are they required to pay any of the account’s fees or expenses directly, all of which are deducted from the custody account under review by the custodian and trustee.

What can an advisor/manager charge to manage the underlying assets of the FlexETP?

The appointed Portfolio Manager will establish the terms for their management fee in the Series Documentation, the fee is deducted periodically from the Portfolio. Managers may also charge performance fees (i.e., 2/20 structure). In essence, the FlexETP program allows for the fee arrangement that best suits the Portfolio Manager and its clients.

What is the minimum amount required to issue a FlexETP?

A Manager can arrange for the origination of a FlexETP with as little as one million in assets under management. Please contact our client relations team at info@flexfundsetp.com to find out more about what is required to issue a FlexETP.
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Disclaimer: These commissions only apply for funds that will operate on Interactive Brokers.