Note that this article relates to launching retail funds. Institutional funds or segregated mandates are a whole different ballgame.
So, this question comes up more times than any other when speaking to potential clients.
How Long Is A Piece Of String?
The problem is that there are so many variables that it is impossible to give an accurate answer.
- Where will the fund be domiciled?
- How many sales markets will be targeted?
- Are regulatory structures already in place or does a new one need to be set up?
- Are operational processes already in place or do they need to be set up?
- What tasks can be done internally vs using external providers?
- And the list goes on….
So now that we explained how difficult it is to come up with a number let’s try and at least give some sort of an answer:
A Brand New Setup
To launch a fund in a brand new regulatory vehicle with no current operational processes to piggyback on you are looking at a substantial figure – probably in the £250k to £350k range.
Some of this can be offset by increasing the ongoing fees to third party service providers while lowering the initial fees. However, legal and compliance fees, filing with the regulator, marketing costs (think regulatory requirements like KIID production, etc and not just actively marketing the fund) will very quickly increase the costs.
Add To An Existing Setup
But what if you already have a regulatory umbrella in place and can launch the new fund in that umbrella? Chances are you will also have operational processes in place that you can duplicate.
In this case costs will be lower, but even large companies with significant internal resources will look at spending over £150k.
Here is another (slightly older) article about fund launches.
The Elephant In The Room
What else can have a big impact on costs? Having an inexperienced person running the fund launch project. We have seen so many companies trying to do it themselves without any specialist resources and every time they had to redo some of the steps.
They move from A to B to C, etc without realising that what they do in A will have an impact on D. Get to D and they realise the previous steps were done wrong, so now they have to go back to A and do it all over again.
Yes, getting an expert in is costly (whether consultant or contractor, more on that in a later article), but you will save enormous time, effort and eventually costs by doing so.