In recent years, the financial industry has seen significant advancements driven by technological innovation. These advancements have not only occurred in sectors like medicine and telecommunications but have also transformed capital markets, as a recent research from FlexFunds shows. The creation of new financial instruments, such as money market funds, inflation-protected securities, REITs, and zero-coupon bonds, has energized market activity and generated new business opportunities.
One of the most notable innovations is Exchange-Traded Products (ETPs), which include Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs). These products allow portfolio managers to access a wide range of underlying assets, opting for different investment strategies.
Investment vehicles (ETPs) have had a significant impact on portfolio management, facilitating greater diversification, accessibility, and customization. Some of the key impacts are:
- Diversification: Investment vehicles, such as mutual funds and ETFs, allow investors to access a wide range of assets, sectors, and geographies. This facilitates portfolio diversification, reducing overall risk.
- Access to specialized markets: Through investment vehicles, portfolio managers can access specific markets or strategies that might be difficult to reach directly, such as emerging markets, technology sectors, or alternative strategies.
- Cost reduction: Many investment vehicles have contributed to cost reduction in portfolio management, making investment more accessible to a larger number of people.
- Customization: With the wide variety of vehicles available, portfolio managers can build investment strategies more aligned with the specific goals and risk profiles of their clients.
- Liquidity: ETPs offer liquidity, allowing managers to adjust their portfolios quickly in response to market changes.
- Innovation in strategies: The development of more sophisticated investment vehicles, such as thematic funds or sustainable investment funds, has enabled portfolio managers to implement more innovative strategies aligned with current trends.
Depending on the strategy’s objective, the ETP structure can vary, facilitating the inclusion of alternative and less liquid assets in investment portfolios.
FlexFunds has been a pioneer in implementing asset securitization programs, which facilitate the issuance of investment vehicles that allow for the securitization of multiple investment strategies, thereby increasing liquidity by facilitating access to a greater number of international investors. Additionally, FlexFunds’ solutions allow for the repackaging of any type of asset into an ETP in an agile and cost-efficient manner, providing portfolio managers with an effective tool to bring their strategies to market faster and at lower costs than conventional funds.
The role of NAV in ETP management
A crucial aspect of ETP management is the Net Asset Value (NAV), which represents the intrinsic unit value of investment vehicles such as ETFs and ETNs. NAV provides transparency to investors, allowing them to track the value and performance of their investments. FlexFunds ensures that the NAV of all ETPs issued under its program is distributed through leading price dissemination platforms, such as Bloomberg, Refinitiv, and Six Financial.
The calculation of NAV is based on three main components: total assets under management (AUM), accumulated liabilities, and units outstanding. The frequency of NAV updates depends on the liquidity of the underlying assets and the fund’s investment strategy. For example, funds investing in liquid assets may have a daily updated NAV, while those investing in illiquid assets may update their NAV on a monthly basis.
The integration of products like ETPs into investment strategies has transformed the financial industry, offering new opportunities for both investors and asset managers. Securitization programs, such as those developed by FlexFunds, provide effective tools for diversifying portfolios and optimizing asset distribution. By acting as the NAV calculation agent and facilitating the issuance of ETPs, FlexFunds positions itself as a strategic ally for asset managers looking to expand and consolidate their investment funds.
Disclaimer:
The purpose of content of the above article, blog, or post is only informational, and it is not intended to provide any sort of investment advice, as an offer of solicitation to buy, sell, or hold, or as recommendation, endorsement of any security, investment, fund and / or company. The content and information provided in the above article, blog, or post does not constitute financial, trading, or investment advice of any type. Neither FlexFunds ETP nor FlexFunds Ltd. is a U.S. registered broker-dealer, or an investment adviser registered with the U.S. Securities and Exchange Commission. Our entities do not raise capital for clients or the Issuers. We do not solicit any specific products, nor offer investment advice or make investment recommendations, nor do we offer tax, legal, financial advice or otherwise. Perform your own due diligence and consult a financial advisor prior to making any investment decision.
For Emilio Veiga Gil
