ECOFIN Portfolio Solutions Ltd operates a platform for investment solutions based on a procurement pooling concept.”Portfolio Pooling”. Clients include foundations, family offices and qualified private investors with assets of around 5 million Swiss Francs or more to invest.
The portfolio solutions are based on analysis of the investor’s objectives and risk properties, and on earnings development scenarios and financial market risks. These properties are represented by investor specific benchmarks, and implemented as cost-effectively as possible using “investment building blocks”, i.e. index funds.
All cost elements are reported transparently.
As at the end of December 2016, ECOFIN Portfolio Solutions Ltd managed over 300 million Swiss Francs for charitable endowment foundations and private investors, which were invested in some 20 different institutional investment funds.
ECOFIN Portfolio Solutions Ltd works together with custodian banks, fund providers and other partners. Providers are regularly checked for quality and price and changed if necessary.
ECOFIN Portfolio Solutions Ltd adheres to a clearly defined approach:
- Determination of investment strategy
- Implementation of investment strategy
- Control of investment results
- Checking of investment strategy.
ECOFIN’s structured procedure consists of the following stages:
DETERMINATION OF INVESTMENT STRATEGY
The investment strategy is a portfolio structure with which a planned return on capital (dividends, interest plus price increases) can be achieved with minimum risk. To this end, the available investment categories are combined with the help of statistical information and mathematical methods, to achieve the optimum relation between expected return and risk. The technique is based on the principles of “Asset Liability Management”.
ECOFIN uses tried and tested software tools for these processes.
The investment strategy is implemented a transparently and cost-effectively. A key factor is the decision as to whether implementation is made using passively or actively managed investment funds.
ECOFIN takes the well-founded empirical view that the major international markets should be covered with passive investment funds with full or partial replication of the index portfolio. The capital is also invested safely in physical securities, hence safely from an organisational perspective
ECOFIN uses well thought-out rebalancing procedures in order to adhere to the investment strategy with appropriate accuracy.
MONITORING OF INVESTMENT RESULTS
The investment result is continuously monitored and assessed. This includes the establishment of a governance structure appropriate to the client and the size of the portfolio so that there are either no conflicts of interest for the representativeor that they are transparent.
Monitoring of investment results includes the following aspects:
- Performance measurement
- Monitoring of investment results in relation to the selected benchmarks
- Monitoring of compliance with strategic requirements (actual/target structure)
- Monitoring of compliance with investment restrictions
- Monitoring of fees.
ECOFIN produces an informative report once a year and – where required, – on a quarterly basis, informing clients of key aspects of the development of their portfolio.
REVISION OF INVESTMENT STRATEGY
Capital markets, and also the investor himself, are subject to changes. Every two to three years, and more often for major events, the investment strategy should therefore be checked for adequacy and adapted if necessary.
INVESTMENT BUILDING BLOCKS
ECOFIN Portfolio Solutions Ltd offers a comprehensive range of actively and passively managed institutional investment funds. These investment funds complement each other, are tracked physically, can generally be hedged against currency risks and make use of advantageous tax regulations.
The properties of the investment funds are as follows:
- They complement each other in their diversification properties.
- The investment funds used fully represent the index concerned (“full replication”) or comprise a suitable stock selection of the key elements (“stratified sampling”). At critical times in particular (e.g. during a financial crisis) this solution has major advantages in terms of safety compared to solutions with futures or structured products. In addition, it is possible to deliver larger stock positions physically instead of cash.
- Funds of shares and bonds not quoted in Swiss Francs can – with the exception of instruments from emerging markets – be hedged in Swiss Francs. In this way investors can avoid currency risks at low cost.
- For foreign shares, fund tranches are available with which the advantages of the double taxation agreement between Switzerland and the USA can be passed on to the investor. For foundations and firms domiciled in Switzerland and with a registered office in Switzerland, dividends of US companies are only taxed at 50% under certain conditions.
ECOFIN offers Swiss shares, World shares, emerging market shares and also various investment categories in bonds (where possible also hedged in Swiss Francs).
The investor is informed transparently of all costs and revenues of ECOFIN Portfolio Solutions Ltd.
REDUCED WITHHOLDING TAX
For foreign shares, there are fund tranches available which pass the advantages of the double taxation agreement between Switzerland and the USA to the investor. In this case dividends of US firms distrbuted to investors in Switzerland are only taxed at 50%.
ECOFIN supports the investor in reclaiming withholding tax.
HEALTH CHECK / PERFORMANCE
Investors wishing to become clients of ECOFIN Portfolio Solutions Ltd can submit their portfolios to ECOFIN for analysis – diversification, costs, performance.
The analysis will be provided at low cost. If the investor then becomes a client of ECOFIN, half the cost will be set off against future investment costs (excluding fund costs).
With capital investment, for reasons of content and regulations, a large number of activities have to be carried out at different costs and prices. In the past, portfolio managers for the most part charged these costs for simplicity’s sake as a lump-sum to the portfolio. This made it difficult for the investor to form an opinion as to what he was paying for the individual services.
ECOFIN Portfolio Solutions Ltd takes the approach of showing prices for activities individually and explicitly. When comparing costs, it is essential that comparable costs are in fact compared with each other.
ECOFIN Portfolio Solutions Ltd carries out the following activities with individual calculation of fees for each of them, for reasons of transparency:
- Establishment of the portfolio(s)
- Determination of investment strategy based on an ALM analysis
- Asset building and reduction (implementation of investment strategy; repayment)
- Portfolio management.
SECURITIES ACCOUNT SET-UP COSTS
Setting up a securities account at a custodian bank of ECOFIN Portfolio Solutions Ltd, e.g. State Street Bank GmbH, usually does not involve any bank charges or custodian fees.
COSTS FOR DETERMINATION OF INVESTMENT STRATEGY
Derivation or review of the investment strategy using ALM analysis can – depending on requirements – turn out to be comprehensive and complex in varying degrees. The costs differ accordingly.
- Partly standardized derivation or review, including demonstration: 4,500 Swiss Francs
- Customized derivation or review, including demonstration: from 10,000 Swiss Francs (according to preliminary discussion and offer).
PORTFOLIO SET-UP COSTS
Portfolios can be set up with cash deposits or delivery of securities. In the second case details of delivery must be discussed. The costs vary:
ASSET BUILDING WITH CASH PAYMENTS
INVESTMENT FUND COSTS
Investment funds charge an issuing premium or redemption fee as a one-off sum between 0.0% and 0.5%. This premium or fee is credited to the fund assets and is used to cover transaction costs incurred by the fund assets due to the transaction. In this way any client who has not made any transactions is not charged.
With asset building by cash payments, no costs are involved with ECOFIN. However the minimum contract period is 1 year.
There are currently no further fees for the investment funds used by ECOFIN. If other investment funds are assessed and used at the client’s request, the conditions of these investment funds apply.
ASSET BUILDING BY SECURITIES DELIVERY
INVESTMENT FUND COSTS
For securities deliveries a proper “transition management” is required. With investment funds, additional costs may be payable depending on the complexity of the order, agreed and billed separately. (This method may – depending on the investor’s situation – be more favourable than selling securities elsewhere and a cash payment.)
For securities deliveries a proper “transition management” is required. Additional costs may be payable with ECOFIN, depending on the complexity of the order, agreed and billed separately.
PORTFOLIO MANAGEMENT COSTS
Portfolio management entails ongoing and one-off activities that may have a cost impact in the case of investment funds and with ECOFIN.
The content of this website is purely for information. ECOFIN Portfolio Solutions Ltd cannot undertake any guarantee of the completeness, accuracy or current validity of the information. Claims on this website may be inaccurate or incomplete for specific persons. Information and offers are only binding if obtained by investors personally from ECOFIN Portfolio Solutions Ltd.
All the information on this website is intended for natural persons and legal entities domiciled in Switzerland with Swiss Francs as the reference currency. Persons domiciled in other countries may only use these if the legislation of their home state permits advice from foreign advisors and/or investment in investment funds authorized abroad. If the investor’s currency is not Swiss Francs, the details can only be used to a limited extent. Details of this can be provided by an ECOFIN advisor. US persons may not use the information on this website.
All details regarding financial products and financial tools on this website are purely for information and do not represent any recommendations or invitation to purchase. This is only possible through a competent advisor taking into account the investor’s specific situation.
In addition to the risks characteristics of shares and bonds, the financial products described also entail specific risks, including those in connection with securities lending. Your advisor will be happy to provide details and explain what has to be done to minimise these risks.
Investors wishing to use the “Shares developed markets excluding Switzerland” investment fund tranches (with or without hedging of currency risk) must be prepared to provide personal data to the American tax authorities, in order to benefit from the associated tax advantages.
SUPERVISION AND REGULATION
ECOFIN Portfolio Solutions Ltd is a member of PolyReg Selbstregulierungs-Verein, Zürich, and complies with its regulations regarding compliance with provisions for combatting money-laundering and the financing of terrorism.
ECOFIN Portfolio Solutions is subject to the code of conduct of PolyReg for investment managers (PolyAsset). Clients signing an investment management contract with ECOFIN are deemed qualified investors pursuant to the Swiss Law on Collective Investments. This means they may invest in products reserved for this category of investors irrespective of their assets and irrespective of whether they have a professional treasury department.
Compliance with both sets of rules is examined by independent auditing bodies.
Telephone: +41 43 499 3040