Starting a mutual fund

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Learn about starting a mutual fund including steps and costs for creation, legal and compliance items, common pitfalls and more...

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Starting a mutual fund

  1. 1. 15093-GFS-2/11/2013
  2. 2. Why Mutual Funds? Efficient way to combine smaller accounts Ramp up your strategy with ease Costs savings – Trading costs – Shareholder servicing More time to devote to high net worth clients Increased distribution and sales opportunities – Retail Channel – RIA Channel – Institutional Channel
  3. 3. What You Need to Start a Fund Successful Strategy Long-Term Vision Distribution Plan Third-Party Service Provider – Experienced – Engaged – Comprehensive turn-key services
  4. 4. Steps to Creation and Costs Once administration and legal teams are selected, it takes 3 to 4 months to get to market.
  5. 5. Mutual Fund Cost Savings – Series Trusts Series Trust: single registered entity with the SEC comprised of independent mutual funds managed by separate advisors. Sometimes referred to as shared trust. Operational efficiencies – Service provider manages corporate, board and regulatory governance Economies of Scale – Many services are negotiated at the trust level, not the fund level Compliance and Proper Board Oversight – Trust attracts more qualified board members Enhanced Distribution – Established selling agreements at trust level
  6. 6. Series Trusts Northern Lights Fund Trust (NLFT): partners with advisors to provide potential advantages like joint marketing exposure and advisor networking opportunities Northern Lights ETF Trust (NLET): partners with advisors to meet demand for ETF products Northern Lights Variable Trust (NLVT): similar to our mutual fund shared trust, but products are sold through insurance carriers Two Roads Shared Trust: a mutual fund shared trust designed for independent alternative funds
  7. 7. Legal and Compliance Issues Diversification rules – Rule of 50: 50% in diversified assets, no more than a 5% holding – Rule of 25: if you own more than 25% of a security you must disclose the underlying financials of that holding – Rule of 3: you may not own more than 3% of a securities underlying shares, exception - participation agreements – Limited to 15% illiquid holdings – 90% of income must be passive income • Commodities are active Board governance – Quarterly Board Meetings – Distribution / Strategy / Expenses
  8. 8. Common Pitfalls Lack of distribution plan – Client portfolios • Overstatement of assets to move – RIAs – Supermarket – Institutions – Hiring a wholesaler Reallocation of Resources
  9. 9. Due Diligence Is a pooled solution right for you? – Number of Accounts • AUM of smaller accounts – Distribution Network • Relationships with – Broker-dealers – Insurance platforms – Cost Analysis • SMA vs Fund • New Assets needed
  10. 10. Why Choose Gemini? Our goal is to wrap around your business Consultative approach to pooled solutions Over three decades of experience Personalized service Open architecture technology Started over 70 funds in 2012 Strategic partnerships with vendors formed for your advantage
  11. 11. 0028-NFS-1/6/2012
  12. 12. Quick Overview Started in 1983 One of NorthStar Financial Services Group, LLC’s six subsidiaries – NorthStar has more than $139 billion in AUM and AUA – Gemini and Northern Lights Distributors, LLC administer or distribute approximately $31 billion in AUM Serve over 125 clients with more than 275 funds Serve a range of fund families including families of as large as 80 Largest individual fund has over $1 billion in assets Largest fund family has nearly $2 billion in assets
  13. 13. Employee Experience Gemini has more than 200 employees Executive Management experience at: – JP Morgan Chase and Co. – Salomon Smith Barney Asset Management – Morgan Stanley – Bear Stearns & Co, Inc. – Pioneer Funds Senior Management experience at: – JP Morgan Chase and Co – Salomon Smith Barney Asset Management – Goldman Sachs – Legg Mason & Co – Bank of New York – Jackson National Asset Management – Dreyfus Service Corporation – Ivy Asset Management, LLC
  14. 14. Technology PAM from Princeton Financial Systems – No. 1 Mutual Fund Portfolio Accounting System PowerAgent from Envision Financial Systems – Real-time, full-featured transfer agency and shareholder accounting system – Open, modular and rules based architecture Shareholder Web Services – Proprietary secure web-based direct interface – Five levels of web access for fund administrator, broker-dealer, broker-dealer branch, registered representative and shareholder – Customizable logo and color scheme for your website
  15. 15. Technology, Cont’d– Unity Performance from Confluence– Daily fund performance calculations– Reports in multiple formats– Benchmark comparison of a fund’s performance– Automates the process of board book creation and distribution– Processes fund expenses
  16. 16. Fund Accounting Reports Report options include: – Adjusted Net Assets – Benchmark Performance – Broker Commission – Historical NAV – Holdings by Tax Lot – NAV Analysis – Portfolio Benchmarks – Trial Balance – And more…
  17. 17. Transfer Agency Reports Report options include: – Dealer Sales Activity Detail – Funds Daily Rep Report – Large Held Trades Report – Posting Details – Region Distribution Channel Sales Detail – Shareholders on Record – And more… Sales Reporting through Access Data: – On-demand reporting for: • Sales • Compensation • 22c-2 compliance
  18. 18. Due Diligence CenterWe offer an online Due Diligence Center that contains the followingdocuments:Business Continuity Plan – Disaster recovery locations: • Woodbury, NY • Fremont, NE • Kansas City, MO – Quarterly testing performed at all centers – Less than 3 hours for mission critical systems to be operationalInsurance Coverage – Transfer Agent, Fund Administrator and Fund Accountant Professional Liability – Financial Institution Bond – Privacy / Network Security
  19. 19. Due Diligence Center, Cont’d SOC1: SSAE Type II for Transfer Agency – No material exceptions in the past 5 years – Completed every 6 months SOC1: SSAE Type II for Fund Accounting – No material exceptions in the past 5 years – Completed every 6 months SOC1: SSAE Type II for Alternative Fund Accounting and Administration Operations – Reviews began for services rendered starting July 2010 – No material exceptions noted – Completed every 6 months Compliance Manual for Administration, Fund Accounting and Transfer Agency Services – Provides a Fund’s Chief Compliance Officer and Board with a summary of Gemini’s compliance policies and procedures
  20. 20. Expanded Services Northern Lights Distributors, LLC – Sales and Distribution Support – Established selling agreements – NSCC member – one of the largest in industry – Advertising review Northern Lights Compliance Services, LLC – Chief Compliance Officer independent consulting services – Employees average over 20 years of industry experience Gemcom, LLC – EDGAR filing and printing services – Competitive pricing – Each job bid individually
  21. 21. Gemini Fund Services  Comprehensive Pooled Investment Solutions  Engaged and Talented Employees  Partnership to Achieve the Vision of Your FundAndrew Rogers Eddie LundPresident VP Business Development631.470.2669 402.493.4603 x7176AndrewR@geminifund.com Eddie.Lund@geminifund.com

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