Mindful Wealth re-domiciles CLO fund to Singapore after VCC pilot programme

BOUTIQUE wealth management firm Mindful Wealth on Tuesday announced it has completed the Variable Capital Companies (VCC) pilot programme.

The Singapore-headquartered company, which also has an office in Dubai, has thus re-domiciled one of its funds from the Bahamas to Singapore.

The Avenida CLO Equity Fund, which focuses on the equity tranche of collateralised loan obligations (CLOs), is now active in the Republic.

CLOs are actively managed instruments that invest in senior secured bank loans to sub-investment grade corporates. Each CLO is a single security backed by a pool of collaterised debt, with investors receiving scheduled debt payments from the underlying loans.

Launched in 2016, the Avenida CLO Equity Fund is the company's flagship fund and invests in a diversified portfolio of US-dollar CLO securities, comprising CLO equity pieces, lower-rated debt CLO tranches (generally BB rated), and CLO warehouse securities.

The fund has about US$80 million in assets under management (AUM). As at Dec 31, 2019, it has returned 32.37 per cent since inception, according to the company. It is managed by Mindful Wealth's Massimo Paschetto, Alberto De Micheli and Stefano Paschetto.

The fund has a medium to long-term investment horizon, given that it invests in fairly illiquid securities.

"CLOs are a relatively unknown sub-asset class, which means the market is ripe for the discovery of a niche solution to a difficult global low-rate environment," said Mr Massimo Paschetto, senior investment manager at Mindful Wealth.

In January, the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority (Acra) jointly launched the much-lauded VCC structure and the accompanying grant scheme.

The VCC - hailed as a game changer for Singapore's fund management industry - is a flexible corporate entity targeted at a wide range of investment funds.

A group of 18 fund managers were selected for the pilot programme last quarter, to incorporate or re-domicile a total of 20 investment funds as VCCs. These investment funds comprise venture capital, private equity, hedge fund and environmental, social and governance strategies.

Mindful Wealth, which has US$600 million in AUM, was among the pilot programme participants. With licences in Singapore and Dubai, the firm offers advisory and discretionary wealth management services as well as manages its mutual funds.

Through its Fund Platform, Mindful Wealth also helps to relocate and re-domicile offshore funds to Singapore's fully regulated jurisdiction.

The company worked with administrative services provider Genesis Fund Services, Singapore law firm Shook Lin & Bok and Swiss private bank Cornèr Banca SA on the re-domiciliation of its flagship fund.