Bjoern Kogler and Thomas Marte explain the advantages of Liechtenstein as a fund domicile and how the private bank can help fund promoters launch their products.
In an increasingly challenging operating and regulatory environment for fund managers, deciding on the most appropriate fund domicile can be difficult. Bjoern Kogler, team head EAM business development at LGT Bank, and Thomas Marte, CEO of LGT Fund Management Company Ltd., explain what sets Liechtenstein apart and how LGT helps UK-based wealth managers, asset managers and multi-family offices to launch new and increasingly sophisticated funds.
What advantages does Liechtenstein have compared to other fund domiciles?
Bjoern Kogler: It offers the attractive conditions of both worlds for asset managers. Fund promoters can launch Liechtenstein-domiciled funds into the Swiss market without stamp duty thanks to our customs and currency union with Switzerland. And funds can be marketed within the EU because Liechtenstein is part of the European Economic Area.
What does that mean for fund promoters launching new products?
Due to Liechtenstein’s size, we are nimbler when processing the launch of new funds. Liechtenstein’s focus on time to market is built into the legislative regime that the regulator – the Financial Market Authority (FMA) – must follow.
Can you give an example of how this works in practice for fund providers?
For instance, new UCIT structures must be authorized within two weeks. With alternative investment funds, it is four weeks approval time. We often see them completed well ahead of these deadlines. This gives fund promoters certainty over time to market.
What about the tax side of things for fund promoters?
Generally, all Liechtenstein-based funds are subject to income tax, however income of the assets within the funds is exempt from taxation. Funds are not subject to any withholding tax in Liechtenstein.
Thomas Marte, what is the wider context vs. your competition?
Liechtenstein is a liberal and business-oriented country with a stable social, legal, and economic system supported by the free movement of goods, people, services, and capital. It does not have any sovereign debt, and Standard & Poor’s recently reaffirmed its AAA rating with a stable outlook. This highlights Liechtenstein’s stability amid a highly uncertain geopolitical and economic backdrop.
Does that stability come at the cost of going it alone in terms of regulation?
We have strong relationships with other governments and regulatory authorities, and we participate in the automatic exchange of information. Moneyval – the Council of Europe’s permanent monitoring body to counter money laundering and financing of terrorism – stated that Liechtenstein demonstrated a “substantial level of effectiveness” in its most recent assessment.
How is LGT reacting to trends in the current market environment?
Bjoern Kogler: ESG is in our DNA – they are key issues for LGT and the Princely House of Liechtenstein. We provide an ESG reporting engine for end-client reporting. And an ESG score for every single position – and the overall portfolio – based on its carbon footprint.
We are also consistently investing in our platform and systems, such as ESG reporting functions, particularly in legal and regulatory requirements.
Liechtenstein has welcomed digital asset providers. Can LGT offer access to cryptocurrencies?
Thomas Marte: We have established a third-party partnership that allows our clients to trade cryptocurrencies like Bitcoin or Ethereum.
Where is LGT in terms of market share, and where you want to go?
Funds managed on the LGT platform represent about 57 percent of all funds domiciled in Liechtenstein, including investment funds we offer for private banking clients and third-party funds. We have a long tradition of a compelling, high-quality offering in Liechtenstein and Switzerland. We’re interested in expanding to a wider U.K. and European clientele.
How can LGT Bank specifically help wealth managers, asset managers, multi-family offices?
Bjoern Kogler: We offer a one-stop shop, including custodial banking services, management company and AIFM services, administration, and transfer agency. We are very client-centric and offer clients a single point of contact to build a stronger relationship.
In these challenging times, we know that costs are important too. That is why LGT operates an all-in fee model. The model is very easy and transparent as it covers all our services, except for one-off fees for trading.
We also offer an enhanced trading experience for our clients. Our trading services are open from 7 a.m. until 10 p.m. CET, which includes US closing. We also offer direct access trading, which allows you to keep your finger on the ‘pulse of the market’ with an experienced partner at your side.
What differences to larger fund competitors play out in your everyday dealings with clients?
Thomas Marte: LGT is privately-owned, which makes a big difference in addressing these clientele. The culture created by our owner – the Princely House of Liechtenstein – reflects our stability and strong values. Our owners are entrepreneurial, like many of our clients. Our focus on long-term relationships means that our interests are aligned: we want to grow with the fund promoter.
To find out more about the advantages of Liechtenstein as a fund domicile, register for the Liechtenstein Fund Association upcoming roadshow in London at https://roadshow.lafv.li/.
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