Private Label Funds

Private Label Funds
Your funds / assets in an optimal legal framework

Liechtenstein offers interesting solutions
LGT Fund Management Company Ltd.
Overview
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
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Key benefits and opportunities
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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What are Private Label Funds (PLFs)?

PLFs allow flexible asset allocation (as well as pooling, subscription, redemption)
Complete flexibility in relation to TAA, asset classes, investment strategies, regions, currencies, multimanager 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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The rationale for a Private Label Fund (PLF)

Security
Transparency
Security
Investment funds are separated assets and off-balance sheet, are
regulated investment products and supervised by the financial
market authority.
Transparency
Your assets in an investment fund are in a cost efficient, safe,
audited, transparent legal framework with an independent
reporting.
Simplicity
Simplicity
You 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
Focus on your asset management

skills
Easy access to the European Market
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 skills

Do 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 Market

UCITS and future AIFs with domicile Liechtenstein have due to EU
passports fast and easy access to the whole European market.
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Your opportunities and benefits of a PLF

Asset managers
Own product under own brand
Individual investment policy and fee structure
Track record
Wealthy families/private clients

Individual structuring of individual sub-funds
as part of a segmented fund in the same way
as with mandates
Investment policy regularly reviewed
Reduction in management and administration

expenses
Standardized reporting
Standardized reporting
Possibility of public distribution
Possibility of establishing a fund for qualified

investors with very few regulatory
requirements
Reduction in management and

administration expenses
More flexibility with investments
More time for client services
Possible tax advantages when booking fund

units instead of paying tax on an individual
mandate or security
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Set-up of your own investment fund: Essential basics
Set-up of your own investment fund
Definition of Private Label Funds

As a simplification, a Private Label Fund (PLF) combines:
An external asset manager
+
LGTs fund service and depositary capabilities
YOU
The external asset manager determines the label and focuses on his skills,
i.e. investment management, client services and distribution
LGT
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)
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Set-up of your own investment fund
Private Label Funds

e.g. segmented investment undertaking
Asset management
agreement
LGT Fund Management

Company Ltd.
Fund Management
Company
Asset Manager
Investment Advisor,
depending on asset
management agreement
(advisory agreement)
Intermediary
Fund Promoter
LGT Bank Ltd.
Under trusteeship
Segmented investment undertaking

(= Umbrella Fund)
e.g. equities
Client subscribes for
units, which are
booked to the client's
custody account
Custodian bank
agreement
e.g. bonds
Investments
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Possible fund structures: Legal background
Fund structures
Self Managed
variable Capital
SICAV
Fixed Capital
SICAF
Segmented / Unsegmented
Unit Classes
FUND
Master-Feeder Structures
Fund management
company
EU pass
Contractual form /
Collective Trusteeship
no EU pass
no EU pass
no EU pass
OGAW (UCITS)
IU for other
values
IU for other values

within increased risk
IU for
qualified investors
Fund type
Externally Managed
Fund Structure
Investment Company
Corporate form
Future AIF -> EU Pass

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Possible fund structures - UCITS
UCITS
Undertakings for Collective Investment in Transferable Securities
1
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
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
IUs for other values with increased risk
3
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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Possible fund structures Investment undertakings for qualified investors
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.
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
15
Private Label Fund set-up process

1 Initial discussion/questionnaire
Client

2

PWC
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
2 Auditor (PWC) checks prospectus

3 Application for authorization submitted
to FMA authorization
4 Technical set-up
FMA
Subscription period/launch
Source: LGT
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Fund set-up: Subscription process
Subscription process (fund for qualified investors)

Investors
Investors
The investor can subscribe units of the

relevant fund via his local bank.
The local bank has to check the
subscription requirements (qualified
investor).
Local Bank
The local bank will forward the

subscription to LGT
No information about the investor has

to be delivered to LGT.
2
2
The investor can subscribe units of the

relevant fund directly via LGT.
LGT has to check the subscription
requirements (qualified investor).
Segmented investment undertaking (Umbrella)

e.g. equities
e.g. bonds
Each fund (segment) can be subscribed

individually.
The fund management company does
not administrate a list of investors.
e.g. private
equity
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Timeline for fund set-up

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
5-11 weeks
(normally 6 weeks)
3-4 weeks
TOTAL TIME
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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LGTs Fund Service Offering

Depositary
Fundadministration
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
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Pricing
20
Pricing
What does a private label fund cost?

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.
Recurring costs
One-off costs
set-up costs
CHF 20000.-
fund administration
ca. 7 - 15 bps
check of prospectus by auditor
ca. CHF 5-10000
custodian bank
ca. 8 - 20 bps
authorization fees
ca. CHF 0-10000
auditing costs
ca. CHF 10000
FMA fees
CHF 2000
transaction costs
tbd
Likely costs: approx. 10-30 bps per annum plus third-party costs (official fees, auditors, etc.)
A detailed offer can be made once the large questionnaire has been completed
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Concrete Example of a fund for UHNWI
22
Different segments of IU for qualified investors

General benefits for qualified investors
Rapid and low-priced approval procedure
Reduced statutory reporting and disclosure
requirements
IU for qualified
investors
Segment 1
trad.
investments
Segment 2
Hedge Funds
Segment 3
tbd
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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Clear structure with segments

In general
Private Label Fund

Familie
Investors
Cash
Bond issues
Shares
Alternative

Sovereign
Corporate
High Yield
Emerging Markets
North America
Europe
Pacific
Emerging Markets
Hedge Funds
Private Equity
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Dynamic Global Endowment Fond

Management company
Fund administration
Custodian Bank

LGT Bank Ltd.
Asset Management
Asset Management Ltd.(tbd)
maintains the unit register
delegated to an external provider
Auditing
PWC

Investment Undertaking (IU) for qualified investors

Trust
Umbrella-Fund consisting of different segments
Registration of the Global Endowment Fund
Fund type
Legal form
Fund structure
Public register
FMA
funds & management company
one week for approval
25
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Fund structure with delegations
LGT Fund
Management
Company Ltd.
Asset Management
Agreement
Lead Asset
Manager
Administration
SubAsset Management
Agreement
SubAsset Management
Agreement
SubAsset Management
SubAsset Management Agreement
Agreement
Sub Asset Manager

Sub Asset Manager
Sub Asset Manager
Sub Asset Manager
Management
Segregated
Account
Management
Segregated
Account
Management
Segregated
Account
Dynamic Global
Endowment Fund
FqA
Management
Segregated
Account
PwC
Auditor
LGT Bank Ltd.

Custodian Bank
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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
Bonds
Stocks
max. 100%
max. 70%
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
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?
33
Why Liechtenstein?
Easy access to European Markets
Legal certainty
Rapid approval procedure
Favorable tax environment
Interesting options
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)
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Comparison of locations
Liechtenstein versus offshore
Liechtenstein versus Switzerland
Advantages versus offshore:
Advantages versus Switzerland:
Liechtenstein UCITS meet the requirements

for recognition in the EU and the EEA (EU
passport) and future AIF
Funds under Liechtenstein law have simplified

access to the EU market (EU passport)
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
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
Euroclear settlement with ISIN & VALOR

Booked in clients custody account with their
own bank, with prices updated via
international data providers
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Fund Domicile Matrix (selection of key differences)

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

Financier (CSSF)
Timeframe for approval by regulatory

body
Yes, 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
None
EUR 8000000 (for Part II UCIs open to

retail public) with exceptions
Regulation
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LGT as your Partner
37
LGT as your Partner
Why LGT?
Facts and Figures (as of December 31, 2014)
LGT Group
Total AuA:
CHF 128.8 billion
Tier 1 Ratio*:
18.4%
Moodys:
Standard & Poors:
Number of staff:
Locations globally:
Aa2
A+
2081
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
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%.
Source: LGT
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LGT as your Partner
What benefits can LGT Fund Management Company Ltd offer

clients?
Expertise in setting up and
administration of (own) funds
Global approaches to solutions
thanks to worldwide network
Infrastructure and
experience
One-stop solution
Client
Quality and
stability
Open to innovative
solutions
Coordination by
one contact person
Up-to-date on current issues

(e.g. AIFM, taxes)
Source: LGT
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Part III Summary, contacts & legal information
40
PLF Takeaways
Why PLF?
Target Clients
UHNWI, family offices, independent asset managers

Particularly interesting for these customers: IU for qualified investors
Security
PLF = secure investment vehicle

Off-balance sheet, controlling through AM (external), Auditor (PWC), LGT Fund Management
Company, custodian bank
Transparency
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)
Efficiency
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
Tax

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
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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
Improved risk management
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
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
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No time limit in case of deficit carried forward
43
Contacts at LGT
Contacts for your private label solutions

Dr. Stefan Lindemann, LL.M.
Roger Schaedler
CEO LGT Fund Management

Company Ltd.
Deputy CEO LGT Fund

Management Company Ltd.
Tel. +423 235 2253

stefan.lindemann@lgt.com
Tel. +423 235 1507

roger.schaedler@lgt.com
French Speaking Clients:
Mag. Thomas Marte, LL.M.
Romain Jacoby
Private Labelling
Tel. +423 235 1777
romain.jacoby@lgt.com
Wealth Structuring
Tel. +423 235 2837
thomas.marte@lgt.com
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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 decisionmaking 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.
45
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
46

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Private Label Funds

Your funds / assets in an optimal legal framework

LGT Fund Management Company Ltd.

Part I Private Label Funds

Key benefits and opportunities

Key benefits and opportunities

What are Private Label Funds (PLFs)?