A. Fiduciary Structure
2. Bespkoe Portfolio Level
3. Sub-Fund Level
4. Underlying-Fund Level
Let’s assume the three clients in this example have given the Fiduciary Manager the following assets to manage:
Depending on the needs of the client, the Fiduciary Manager has constructed three unique and separate portfolios for each of the clients.
Each of the portfolios are bucketed into
different strategies. These could be:
These strategies or buckets could be structured Sub-Funds created by the Fiduciary Manager to better manage the investments or virtual buckets.
Each Sub-Fund invests into underlying funds of the same asset class. These funds can be externally or internally managed.
Initially we will construct the portfolios for
all three clients
Each of the Sub-Funds have got multiple managers (internal and external) underneath them.
Assets that are invested in Strategies (Sub-funds) are further allocated to the following managers as per the below mix:
|Ext. Manager 6||35%||Ext. Manager 6||25%||Ext. Manager 8||40%||Ext. Manager 11||35%|
|Ext. Manager 7||65%||Ext. Manager 7||35%||Ext. Manager 9||5%||Ext. Manager 12||65%|
|Int. Manager 10||40%||Ext. Manager 10||55%|
The internal Fiduciary Manager funds follow a manager of manager arrangement i.e. these funds are also further invested with external managers.
ClearGlass sends the data requests to managers, asking them to complete the CTI Main Account Template for the underlying funds that make up sub-fund 1, 2 and 3, and CTI Private Equity Template for sub-fund 4. In summary, data requests are sent to the following managers:
Looking at the Corporate Bonds Sub-Fund, with knowledge of Internal Manager 1’s manager of manger arrangement, we can summarise the composition of Sub-Fund 2 as below.
The cost data below is sourced from the completed CTI templates which ClearGlass receives back from the asset managers for all the funds.
Internal Manager 1
The table below shows the total product cost for the Corporate Bonds Sub-Fund, calculated using a weighted average calculation.
Client 1 – Product Costs
Service cost data would need to be sourced directly from the Fiduciary Manager.
The table below shows the product costs as both a percentage and monetary amount.
Lastly, to report the total cost to Client 1, we would sum the total product and service cost.
The template displayed below is a suggestion as to how a fiduciary manager could report their costs to their clients. It is designed in line with the CMA Order (part 5) and created to assist the reporting of costs and charges to both: