Mindful Wealth Successfully Completes VCC Pilot Programme With MAS

Mindful Wealth, an Asset Management company with around USD600 million under management, has announced that it has successfully completed the VCC Pilot Programme with the Monetary Authority of Singapore and re-domiciled one of its funds Avenida CLO Equity Fund from the Bahamas to Singapore.

Mindful Wealth conducts wealth management services and fund management activities with licenses in Singapore and Dubai. The wealth management department offers advisory and discretionary management. The fund management department manages the mutual funds of the company, according to a press release by the firm.

Singapore is an attractive location for global public investors and asset owners, such as sovereign wealth and pension funds, to access public and private market opportunities across Asia and ASEAN. In addition, to position Singapore as a leading fund domiciliation hub, MAS has recently introduced the new Variable Capital Companies (VCC) framework to provide a new corporate structure for investment funds which seeks to facilitate the co-location of fund managers’ substantive fund management and domiciliation activities in Singapore. VCC is constituted under the Variable Capital Companies Act.

After MAS launched VCC framework, it has been running a pilot programme for selected Permissible Fund Managers who wished to register a new investment fund as VCC or re-domicile a foreign corporate entity as a VCC.

Marco Frangi, CEO, Mindful Wealth, said “It is a great honour for Mindful Wealth to be part of the VCC Pilot Programme. It gives us first-hand information on the new fund structure and the authorities we have been dealing with are very helpful and professional. We see this as an opportunity to grow our business and look forward to exploring different options with fund managers and clients.”

“With this new legal framework in place, investment managers will have greater operational flexibility in the constitution of funds in Singapore. We have been working closely with the regulators since the beginning and we are among the few pioneering experts in this structure. With our Fund Platform, we can help relocate and re-domicile funds from other offshore jurisdictions to a fully regulated and high standard jurisdiction like Singapore, therefore opening up new opportunities to new and existing funds,” he continued.

Benny Chey, Assistant Managing Director (Development and International), MAS, said “The VCC marks a significant chapter in the development of Singapore as a full-service international fund management and domiciliation hub. The VCC framework provides fund managers with a greater choice of investment fund vehicles in Singapore that caters to the needs of global investment funds and investors. Fund managers will also be able to extract cost savings from centralising their fund management and domiciliation activities in Singapore and structuring their funds more efficiently. The VCC framework also creates new opportunities for Singapore-based fund service providers such as legal and tax advisors, accountants, fund administrators and fund custodians, as we expect more fund managers to use the VCC to structure their investment funds.”

Mindful Wealth’s flagship fund Avenida CLO Equity Fund was launched in March 2016 and is managed by Massimo Paschetto Alberto De Micheli and Stefano Paschetto. It has around USD80 million under management and is one of the few funds globally that focuses on the equity tranche of CLOs. It is available for investment with a low entry value, making the fund greatly accessible. The Avenida CLO Equity Fund has seen rapid growth in its AUM as well as great performance since its inception. As of the end of December 2019, the fund has returned 32,37% since inception.

Avenida CLO Equity Fund’s strategy is, as described by the firm: To produce attractive risk-adjusted returns by investing in USD Collateralised Loan Obligations (CLO); To offer the opportunity for investors to outperform other alternative investments by capturing excess returns in the USD CLO space; To invest in a diversified portfolio of CLO securities comprising CLO equity securities, lower-rated debt CLO securities, CLO warehouse securities managed by a selected number of CLO managers and issued in different periods; To dynamically manage the portfolio to maximise long-term return; and To have a medium/long term investment horizon as it invests in fairly illiquid securities, CLO equities, which by their nature represent the “positive carry”, i.e. the difference between the spread of a diversified loan portfolio minus the CLO cost of funding - the longer the fund is held the more the arbitrage works in favour of the investment.

Massimo Paschetto, Senior Investment Manager, Mindful Wealth, and Fund Manager, Avenida CLO Fund, said “Singapore is well-known for its transparency in governance, strict laws and regulations, economic stability and high level of business ethics. For Avenida CLO Equity Fund to be in Singapore, it signals a good reputation to investors and we are sure this helps to grow our AUM. The VCC model introduces a level of operational efficiency that can improve the efforts of fund managers to maximise investment opportunities. We are delighted that Avenida is part of the new model.”

Mindful Wealth has worked with Genesis Funds Services, Shook Lin & Bok and Cornèr Banca SA on the re-domiciliation of Avenida CLO Equity Fund.

Antoine Bastian, CEO, Genesis Funds Services, said “As the Fund Administrator of Mindful Wealth, we were heavily involved in the process of re-domiciling the fund. The process was very smooth, and it gave us some insight into the fund space in Singapore. We have now decided to open an office in Singapore as we see Singapore is doing its best to become a foremost supporter of the fund management system in Asia. The VCC model will bring in new fund managers and create more jobs. We are here to play a part in the fund industry.”

Tan Woon Hum, Partner, Shook Lin & Bok, said “As one of the rare specialist funds practice in town who took part in the development of the VCC regime and model constitution, we are honoured to have handled 3 successful VCCs in the pilot programme. This is a significant milestone for the Singapore funds industry, and we are excited about what the future holds for Singapore and how the VCC regime can augment our fund industry. Our law firm is ready to advise clients on all types of VCCs, including re-domiciliation from foreign funds to VCCs and financing of VCC funds.”