Structuring of investment mandates for alternative investments

The integration of alternative investments into the asset management of German institutional investors has gained importance in recent years. The ongoing low-interest phase has brought the asset classes a steady influx of institutional investors in recent years. Insurance companies, pension funds and occupational pension schemes in particular are attracted by above-average earnings opportunities and long-term projected cash flows. Many investors initially accessed such investments through holdings in specialized funds of funds.

As confidence in asset classes increases, the focus is shifting to connecting specialized portfolio managers to invest in direct-investing target-date funds, as well as co-investments and direct investments for a broader group of institutional investors. In addition to equity investments, there is also demand for debt investments, especially asset class-related debt instruments (e.g. infrastructure debt). For the organization of these capital investments, structures are needed that enable continuous cooperation and take into account the special requirements of the investors.

Requirement profiles and service catalog

The requirements profile of German investors for investment structures ranges from tax needs (shielding or transparency) to suitability under insurance supervisory law (ability to provide security assets) and investment law acquirability (ability to acquire special funds). In addition, aspects such as limiting liability, ensuring legal control over contractual relationships, and reasonable administrative expenses are of central importance.

The determination of the requirements to be fulfilled by the portfolio manager depends, in the first step, on the catalog of services required by the investors from the portfolio manager. Moreover, these requirements interact with the structure chosen by the investor.