8. Day-to-day management of the fund
“Setting up a fund is a sprint. Running it is a marathon. The relationships with the investment company are essential.”
Key Points
How investors come and go:
- Subscription (entry): the investor meets the conditions for a qualified investor, signs the documentation and subscribes for investment shares at the current NAV (net asset value).
- Redemption (exit): for open-ended funds, the investor requests redemption; notice periods (e.g. months) are common, and for less liquid assets, so-called gates (redemption caps in a single period) are in place to prevent the fund from having to sell off assets at a poor price.
NAV and valuation — the heart of the fund:
- NAV (net asset value): the value of assets per share; this is the basis for both subscription and redemption.
- Frequency: liquid assets (securities) can be valued frequently (typically weekly or monthly); property and private equity less frequently (e.g. quarterly or annually with an expert valuation).
- Methodology in the articles of association: “fair value valuation” and the use of external valuers or the investment company’s internal valuers.
Transactions within the fund (purchase/sale of assets)
- Prepared by the adviser (founder): identifying investment opportunities and divestments, due diligence, negotiations, documentation
- Approved and signed by the investment company: it is necessary to agree the workflow and quality of supporting documents with the investment company (to minimise discrepancies and delays in transactions)
- Transactions under the fund (e.g. in SPVs): handled by the founder themselves; they usually have representatives on the statutory bodies of the SPVs
- As a rule, an external expert valuation of the asset is carried out upon sale or purchase
Control and reporting:
- The Depositary monitors cash flows and compliance with the articles of association / the auditor verifies the financial statements.
- Reporting to investors — regular (NAV, performance, portfolio composition, commentary).
- Reporting to the ČNB — the responsibility of the administrator/manager.
Distribution of returns:
- Either reinvestment (value increases in the NAV) or payment of dividends from investment shares (15% withholding tax)
- The performance fee is settled in accordance with the articles of association (often via a performance class)
Growth (and exit)
“A fund isn’t set up for just one year. Sooner or later, two questions will arise: how to make it grow — and what will its future look like. The structure already provides solutions for both.”
Key points
How the fund grows:
- New subscriptions to an existing sub-fund: the simplest option; the fund “draws in” further capital at NAV.
- A new sub-fund under the existing SICAV: a new strategy or assets without having to set up an entirely new fund; faster and cheaper.
- New share classes: for different types of investors, currencies or fee structures.
Possible “exits” and changes:
- Sale / entry of a partner: the founder can sell their founder’s shares or bring a partner on board to help manage the fund.
- Change of manager: the fund can be ‘moved’ to another manager (process subject to CNB approval + takes approximately 1 year).
- Generational / team handover: the SICAV structure allows for the gradual transfer of management and financial control (via shares and contracts).
- Winding up / liquidation of the fund: controlled closure, settlement with investors, removal from the CNB’s register.
Things to bear in mind when growing the fund:
- Each new sub-fund/class = additional administration and costs — growth must make economic sense.
- The fund’s reputation and track record are assets — they are safeguarded by high-quality reporting and compliance with the fund’s articles of association.