Foreign-Owned Fund Company Opens Doors
November 27, 2000
Finaccess, the first independent, 100 percent foreign-owned mutual fund management company, has begun operating in the Mexican market, with the goal of building a portfolio of US$150 million by the end of its first year of operations.
The new company, based in New York, will use the Internet as the leading distribution channel for its product portfolio, which is expected to consist of five fixed-income mutual funds.
Once it has consolidated its presence in Mexico, Finaccess plans to expand its business into other Latin American countries, including Brazil, Argentina, Venezuela and Chile.
Finaccess Mexico general manager, Luis F. Cervantes, commented that it would firstly seek to strengthen its presence in the country, offering equity mutual funds and hedge funds. He said it was unlikely to continue with its regional expansion for at least 18 months.
After less than a month operating on the Mexican market, Finaccess has already invested US$15 million in operating infrastructure and technology.
According to Cervantes, the trend for world saving to migrate from banks to mutual funds, which can be clearly seen in the United States, Japan and Europe, is also starting to happen in Latin America.
"In this scenario, our goal is to consistently obtain competitive rates of return, with prudent and limited risk levels, and to provide our clients specialized advisory services together with professional and transparent management of their assets," he added.
As for brokerage houses that operate in the market and at the same time launch securities, Cervantes stated that Finaccess would engage exclusively in the management of third-party assets, arguing that this would prevent conflicts of interest.
Finaccess' main shareholders are Insight Capital Partners, ING Baring and Stephen Friedman, former president of Goldman Sachs. The firm comes under the regulations of the financial authorities of the United States and the state of New York.
In Mexico, it is also regulated by the Mutual Fund Act and by the Securities Market Act, as well as being monitored and supervised by the National Banking and Securities Commission. Arthur Andersen is the external auditor.
The five funds that it has decided to launch onto the market are Latin1 (aimed at private individuals, short-term, with daily liquidity and a portfolio of government and bank securities), Latin2, (similar to Latin1, but with liquidity every seven days), Latin3 (targeting private individuals, medium-term, with liquidity every 14 days, composed of government, bank and corporate AAA securities), and Latin4 (also for private individuals, with daily liquidity and a portfolio of government and bank bonds).
These products do not require a minimum investment and can be opened with small amounts deposited, always provided a commitment to make further investments is signed.
The fifth fund, Latin5, is aimed at corporations, with daily liquidity, and consists of government and bank securities with a minimum investment of $50,000 (US$5,000).
This and the preceding two articles first appeared in Latin Fund Management, also published by Thomson Financial.