All mutual funds must register with the SEC in a shared (series) trust or in a standalone trust format.
A series trust is typically designed for investment managers – large or small – who want to start their own mutual funds or ETFs without the complexities associated with organizing a proprietary trust.
A series trust enables investment managers to bring mutual funds to market in an efficient and cost-effective manner. This type of “shared” trust is composed of independent funds, all managed by separate investment advisers. Your fund is branded and marketed under your guidelines, pursuant to regulatory requirements, and shares some costs with other funds in the trust, easing your financial and operational burdens of running a fund.
Specifically, series trusts offer advantages that may not be achievable through a standalone trust, including:
- Access to trust level selling agreements, if applicable.
- Increased efficiencies, as funds in the trust share directors/trustees, chief compliance officers, and other officers as required by the SEC.
- Reduced operating costs, as the group of funds have economies of scale in obtaining the services of auditors, fund counsel, insurance, legal, trustees, blue sky, and more.
- The ability to attract qualified board members who possess the expertise to provide proper board compliance and oversight.
- Freedom for you to focus on portfolio and relationship management.
The Series Trust Structure
Ultimus offers access to multiple series trusts, giving you several options to meet your needs. If you are looking to start a fund family or want more control over your trust structure, a standalone trust may be more appropriate. Contact us to learn more about both.
Some investment managers, particularly those who are looking to establish a family of funds, may find that a proprietary legal entity, a “standalone trust,” best fits their needs. While a standalone trust may cost more initially because of the additional formation costs, it may provide greater long-term flexibility and control.
Your mutual funds are the only funds in a standalone trust, and you are very involved in the selection of the initial board of trustees and fund officers. You can play a key role or ask our assistance in negotiating contracts with professional service providers, such as fund counsel, auditors, and custodians, and you or the funds are responsible for all costs for your trust. Ultimus will use our extensive experience and access our multitude of partnerships to help you form your own board of trustees and align all other services the trust needs.
The Standalone Trust Structure
As your fund matures or your business plan changes, you may find that you need a different approach to your trust organization. You may need a more sophisticated or consultative approach than you’re getting through your fund’s current arrangement. Thus, a move to a different trust or structure may be prudent. Ultimus can help. We specialize in helping you improve the business model for your existing registered fund through conversions from:
- Standalone trust to standalone trust
- Series trust to series trust
- Series trust to standalone trust
- Standalone trust to series trust
|KEY DIFFERENCES||SERIES TRUST||STANDALONE TRUST|
|Control/Establishment||Governed by an established/existing Board of Trustees and Officers, as well as pre-selected Fund Counsel.||Governed by a Board of Trustees and Officers that the client selects.|
|Creation Timelines||4-5 months||6-9 months|
|Creation Costs||Fees are normally paid by the adviser, not the fund. Likely a lower cost than standalone due to negotiated agreements.||Variable based on service provider selection. Fees are normally paid by the adviser, not the fund.|
|Operational Costs||Funds/advisers share trust fees with other entities in the trust, taking advantage of scale and efficiencies of the shared structure.||Funds/advisers are solely responsible for the fees associated with the trust.|
|Adviser Preference||A cost effective and time efficient way for advisers looking to launch a mutual fund.||Typically preferred by advisers looking to start a family of funds or wanting involvement in board selection/participation.|
|SEC Review||75 days||Variable, no set time|
|15C Process and Approval||Yes||Yes|
Deciding between the series trust model and the standalone trust model is an important decision that Ultimus can help you work through. Regardless of your selection, we will be there to provide appropriate resources and guidance throughout the entire process.