• Below, we detail the five steps of FlexFunds’ asset securitization process and the benefits of this process in the creation of ETPs.
• The information is mainly aimed at asset managers who want to learn how to develop listed products.
• FlexFunds offers an asset securitization program that optimizes the distribution of investment strategies. For more information, feel free to contact our experts.

Asset securitization, also known as securitization, is a mechanism that allows an asset or portfolio of assets to be transformed into tradable securities (ETPs).

At FlexFunds, we coordinate this process comprehensively for asset managers, financial advisors, and companies, with the goal of increasing liquidity, efficiency, and international distribution capacity for investment strategies.

Why choose asset securitization with FlexFunds?

Through the issuance of ETPs:

• You can package your investment strategy into a more efficient vehicle than a traditional fund.
• The liquidity of illiquid assets, such as real estate or private strategies, is improved.
• Accessible capital flows are provided immediately, without solely relying on bank credit.
• It allows for diversification of funding sources and reaching new international investors.
• It helps to separate the risk of that strategy from other operational activities.

Additionally, FlexFunds offers a personalized solution with highly competitive structuring times (usually between 6 and 8 weeks) and the ability to issue listed ETPs with a single ISIN code, distributable through Euroclear.

What types of assets can be securitized with FlexFunds?

FlexFunds supports a wide variety of assets for securitization: 

• Liquid assets: stocks, bonds, ETFs, mutual funds, options, futures, currencies.
• Alternative assets: private equity funds, real estate funds, hedge funds, private loans. 

This flexibility is key to creating ETPs that reflect very diverse strategies tailored to different types of investors.

How FlexFunds coordinates the asset securitization process

At FlexFunds, we handle the entire process to make it as simple as possible for our clients:

Step 1: Personalized study and ETP design

After the initial contact, we perform a detailed analysis of the underlying assets, the risk profile, and the client’s objectives. We then design a tailor-made ETP, working with recognized international providers. 

Step 2: Due diligence and engagement letter signing

FlexFunds’ risk committee evaluates the proposed structure. Then, the contract (“engagement letter”) is signed, clearly defining the responsibilities, functions, and service conditions. 

Step 3: ETP structuring and document review

At this stage, the portfolio manager is onboarded, and key documents, such as the series memorandum, constituting instrument, and portfolio management agreement, are drafted and reviewed. 

Step 4: ETP issuance and listing

An SPV (Special Purpose Vehicle), usually Irish, is created, acting as the ETP issuer. An ISIN or CUSIP is generated, enabling global distribution. 

Furthermore, FlexFunds offers custody services for cash and underlying securities, and acts as the NAV (net asset value) calculation agent, reported to platforms like Bloomberg. 

Step 5: Trading and distribution through Euroclear

Once listed, the ETP becomes accessible to investors via Euroclear, facilitating its acquisition through brokerage accounts and private banks in multiple jurisdictions. 

Additional benefits and strengths of FlexFunds’ solution

• Fast Implementation: The process is agile, taking 6 to 8 weeks depending on the case, enabling faster launch than other traditional alternatives. 
• Competitive Costs: Thanks to our experience and network of providers, we offer an efficient structure without sacrificing quality. 
• International Distribution: By issuing ETPs with ISIN and listing them through Euroclear, strategies reach global private banking investors. 
• Transparency and Governance: Formal documentation (series memorandum, constituting instrument) and professional management ensure clarity for all parties.
• Scalability: Whether the assets are few or many, or the portfolio is simple or complex, FlexFunds tailors the solution to the client’s size and profile. 

Illustrative example

A real estate company’s business objective is to reach a larger number of investors.

To do this, it decides to gather a portfolio of real estate assets: residential and/or office buildings, and create a Flex.

Thanks to this investment vehicle, it will be able to break boundaries by improving the distribution of the investment strategy across various international private banking platforms.

Through our platform, it is possible to “repack” those illiquid assets into a tradable vehicle, issue it via SPV, assign an ISIN, and allow investors to access that strategy in a simple and efficient way. 

Key factors to consider in asset securitization

When analyzing a securitization process with FlexFunds, it’s important to consider the following strategic elements: 

• The nature and liquidity of the underlying assets (liquid vs illiquid).
• The risk profile and governance: how the assets are monitored, who manages the portfolio, what legal contracts are established.
• The vehicle size: asset volume, committed capital, number of investors.
• Operational and structuring costs versus distribution potential.
• The legal structure: the SPV, its jurisdiction, how the issuer is legally constituted.
• Exit strategy: how the ETP is expected to be traded or repaid in the future.

To learn more about FlexFunds’ ETPs, feel free to contact our executives. We’ll be glad to assist you.