Gemini offers a fully-integrated process to launch and distribute funds on insurance platforms.
Funds on insurance platforms, which are registered as part of a variable insurance trust (VIT), are very similar to traditional mutual funds. However, there are fewer funds available through insurance platforms than there are mutual funds. Because the competition is limited and there may be ample opportunities to raise new assets, many investment companies consider launching a fund in this channel. Investors selecting funds for their variable annuity or variable life insurance policies can only choose from those available on the insurance company’s platform, thus potentially providing a captive audience for the funds available.
Key Differences Between a VIT Fund and a Traditional Mutual Fund
A fund inside an insurance wrapper has slightly different diversification requirements than a mutual fund.
VITs are required to have the same year-end close date as the associated insurance carrier.
Because insurance companies are participating in the sales and marketing of funds on their platforms, the 12b-1 fees for these funds are higher.
To stay competitive with other funds on these platforms, VIT management fees and expense limitations are typically lower.
All mutual funds must register with the SEC in a shared (series) trust or in a standalone trust format.
This type of trust is composed of independent funds, all managed by separate investment advisors. This means your fund would be registered in a trust with other funds, but you are still fully in control of managing your fund as an independent advisor. Your fund would share some costs with other funds in the trust, easing the financial burden for costs incurred while running a fund.
Specifically, series trusts offer many advantages that may not be achievable through a standalone trust, including:
- Access to trust level selling agreements, if applicable.
- Increased operational efficiencies, as funds in the trust share directors/trustees, chief compliance officers, and officers as required by the SEC.
- Reduced operating costs, as a group of advisors shares expenses such as those for auditors, fund counsel, insurance, legal, trustees, blue sky, and more.
- The ability to attract qualified board members who possess the expertise to provide proper board compliance and oversight.
- Freedom for the advisor to focus on portfolio and relationship management.
Gemini offers access to multiple series trusts, giving you several options to meet your needs.
Your mutual fund is the only fund in a standalone trust. Your firm is responsible for all costs for your fund; however, Gemini will apply our extensive experience and access our multitude of partnerships to help you form your own board of trustees and align all other services the trust needs.
Learn more about the differences in timelines and costs between a series and standalone trust.
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