Sheer Asset Management
, a private investment firm with $600 million in assets, plans to open its first mutual fund three months from now. Tentatively called the Thematic Equity Fund
, the no-load, all-cap core portfolio will gather assets from the existing New York-based business.
According to David Boegart
, a managing director at the Indianapolis, Indiana firm, Sheer could expect to break even after reaching somewhere between $7 and $9 million in assets. What gives?
Although many advisors to an equity fund only see costs covered after $30 to $40 million in inflow, fees for transfer agency, fund accounting, and administration can now start at $40,000 a year, depending on the size of the fund and the share structure.
The backoffice services provider attributes its reduced fee structure to operating on a PC rather than a mainframe system and paying lower personnel costs at its Indianapolis headquarters.
Furthermore, funds can register as a new series within an existing fund trust, like UFS's AmeriPrime Funds family, instead of on its own. Each new fund operates independently but spreads the fixed costs across its members. Each new fund is considered a new series, reducing legal fees with same counsel and boilerplating documents.
"Legal and audit fees are shared across the trust," explained Boegart. "And state registrations are additional although, depending on how many states the fund chooses, this might not be very much money either."
The backoffice firm administrates $5.1 billion in assets and offers distribution through its broker-dealers as well as the supermarket channel.
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