For retailers, the advantages of private label products include flexibility, since the retailer can instruct the manufacturer to produce ­precisely what they want and in the quantity they need; pricing and profitability, as the retailer oversees the supply chain from end to end; and of course branding and brand loyalty. 

Since you’re reading this essay, odds are you know that ‘private label’ also has a ­distinct meaning in the investment fund industry. Bridging the gap between traditional private banking and institutional asset servicing, ­private label funds are primarily developed for UHNWIs, their family offices and small groups of investors that require sophisticated practices and vehicles in the structuring and management of their wealth.

Providing security and discretion, private ­label funds – also known as ‘white-­label funds’ – offer advantages pretty ­similar to those of a private label retail product. The fund initiator defines nearly everything: from the name of the fund to its investment strategy, from the fund’s lifetime to associated fees. Just like Walmart, Amazon and Sephora, the fund initiator benefits from flexibility and efficiency, including control of pricing and distribution.

Luxembourg’s AAA rating and overall stability are obvious attractions for investors.

Bojan Kulisic, Head of private label solutions,  Quintet Luxembourg

Private labeling can offer enormous ­efficiency gains – as all kinds of assets can be ­clubbed together – and far fewer headaches. An ­experienced partner, like Quintet Luxembourg, where I serve, can support the entire private label process, from origination to distribution, ­providing tailor-made solutions and real-world advice every step of the way.

Luxembourg, where Quintet is headquartered, is the largest fund center in Europe and the second largest in the world. The Grand Duchy is also a global hub for private ­label funds. Highly regulated and business friendly, Luxembourg offers an incredible wealth of knowledge and experience when it comes to these sophisticated collective investment vehicles. 

At a time when markets are highly volatile and the global economic outlook is grim – clouded by war, soaring inflation, rapidly changing interest-rate policies and ongoing supply chain disruptions – , Luxembourg’s AAA rating and overall stability are obvious attractions for investors. The ability of wealth managers here to offer efficient structuring, sound governance, transparency, family wealth protection, and tax-compliant onshoring make it even more attractive to anyone ­considering a private label solution.

Quintet has decades of experience guiding UHNWIs, family offices and other investors through the jungle of service providers, ­including management companies, central administrators, and legal and tax advisors. That experience spans both traditional and alternative asset classes like private equity, real estate, infrastructure, and debt. Most importantly, we are independent and can therefore take a customized, open-architecture approach – treating each long-term partnership with our clients as individual and unique.

Keep in mind that private label funds don’t solicit capital from retail investors or the general public. As they are not publicly traded, the regulatory and legal requirements are of course lower – but so are the opportunities to tap the broader market. 

Here again, the comparison with retail stores is apt. Mom & Pop shops don’t private label their products because they lack the kind of scale that would make that potentially profitable. Even Walmart white labels only a limited number of the more than 150 million products it sells. 

Similarly, private label funds are designed for sophisticated investors with complex needs, frequently linked to significant family wealth. For such clients, exploring the private ­label route that passes through Luxembourg can open a world of opportunities. 

Cet article a été rédigé pour  de l’édition  parue le 21 septembre 2022. Le contenu du magazine est produit en exclusivité pour le magazine. Il est publié sur le site pour contribuer aux archives complètes de Paperjam.

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